- Fed’s Bullard argues against a 50 bps rate cut in July.
- FOMC Chairman Powell largely repeats last Wednesday’s remarks.
- US Dollar Index recovers modestly, looks to snap 4-day losing streak.
The greenback gathered strength against its major rivals in the last hour after St. Louis Fed President Bullard’s comments weakened the probability of a 50 basis points rate cut in July. Boosted by the greenback’s rebound, the USD/CAD pair rose to a daily high of 1.3207 but failed to preserve its strength. As of writing, the pair was posting small daily gains at 1.3183.
During an interview with Bloomberg TV, Bullard said a 50 basis points rate cut in July would be overdone. “I don’t think the situation really calls for that, but I would be willing to go 25,” Bullard added. According to the CME Group’s FedWatch Tool, markets are now pricing a 35% probability of a 50 bps rate cut compared to 43% seen on Monday. The US Dollar Index, which reached a daily peak of 96.36 following the knee-jerk reaction, was last up 0.15% on the day at 96.15.
Meanwhile, FOMC Chairman Powell in his prepared remarks today pretty much repeated his opening statement that he delivered last Wednesday during the FOMC press conference.
On the other hand, today’s data from Canada showed that wholesale sales increased by 1.7% on a monthly basis in April to surpass the market expectation of 0.2% by a wide margin to help the loonie stay relatively resilient. Moreover, the barrel of West Texas Intermediate is clinging to its daily gains near the $58 mark, providing additional support to the commodity-related CAD.
Technical levels to watch for