From Marc to Market:
The US dollar is slightly lower against the G10 currencies but the Japanese yen as the North American session gets under way. Chinese and Japanese markets remain on holiday. Outside the Reserve Bank of Australia’s third rate hike of the year, the news stream is quiet. Contrary to claims otherwise, the Strait of Hormuz remains effectively closed. Still oil prices are consolidating in the in the upper end of yesterday’s range.
The US has busy session of economic data, but with Q1 GDP and the preliminary April PMI in hand, most of the reports are old news. New today is the April services ISM. Still, the recent string of data suggest the AI-related boom continues. The Fed funds futures, which have with an exception last Wednesday, have been discounting a chance of a Fed cut this year. It swung in favor of a hike yesterday and is now pricing in slightly less than a 1-in-4 chance of a rate increase. The rise in the long-end of the US curve can largely be explained by the rise in the expected year-end Fed funds rate over the last couple of weeks....
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