USD

The dollar recovered from an eight week low against the euro yesterday and gained against many of its peers. This came after investors consolidated their positions ahead of Wednesday’s Federal Reserve meeting.

The market is now looking for clues from the Fed on whether they will taper policy for later in the year. Fed Chair Jerome Powell’s comments will of course be closely scrutinised. While there’s likely to be questions surrounding a stronger labour market and vaccination program. Those answers will shine light on whether we might see the end of monetary easing.

There is still the possibility of downward pressure on the dollar should Powell play down the recent data. He may adopt a similar stance to recent meetings where he’s insisted it’s still too soon for monetary policy easing.

US Treasury Yields were also little changed yesterday before the Treasury Department sold $183 billion of debt, and ahead of this week’s Federal Reserve meeting.

GBP

Sterling was trading higher against the dollar yesterday. This is despite the weekend’s political fallout surrounding Prime Minister Boris Johnson. The PM is facing a barrage of allegations from his handling of the pandemic to how he financed his official apartment.

But the market is betting on an economic rebound fueling sterling’s rise against the dollar and euro this year as Britain’s vaccination programme outpaces its rivals.

Bank of England Deputy Governor Ben Broadbent has forecast consecutive quarters of rapid growth. But also warned inflation will prove less predictable, according to an interview with the Telegraph.

EUR

The euro fell 0.1% against the USD in early trading after weak euro zone data. Germany’s IFO institute said its business climate index, viewed as a leading economic indicator, edged up to 96.8 in April, less than expected.

Key announcements

15:00 – USD – Consumer confidence