US dollar stumbles despite hawkish FOMC minutes

Philip McHugh May 26th 2022 - 2 minute read

The US dollar extended its losing streak into its fourth consecutive session on Wednesday in spite of some hawkish Federal Open Market Committee (FOMC) minutes.

Meanwhile, the pound is mostly rangebound so far this morning, with GBP/EUR muted at €1.1764 and GBP/USD subdued at $1.2567. GBP/CAD is flat at C$1.6116, while GBP/AUD and GBP/NZD are holding steady at AU$1.7739 and NZ$1.9423, respectively.

Looking ahead, will confirmation that US growth contracted in the first quarter act apply additional pressure to USD exchange rates today?

What’s been happening?

The US dollar initially firmed through yesterday’s session as a risk-off mood bolstered demand for the safe-haven currency.

A weaker-than-expected durable goods release tempered these gains in the afternoon before the minutes from the Federal Reserve’s May policy meeting extended this decline and resulted in the US dollar closing the session lower.

This uptick in the US dollar left the euro on the back foot on Wednesday, due to the strong negative correlation between the world’s most traded currency pairing.

The downturn in EUR exchange rates was also attributed to the latest German consumer confidence figures, after June’s index printed close to a record low.

Meanwhile, the pound was left to fluctuate yesterday following the publication of Sue Gray’s report into Downing Street lockdown breaches.

The report was thought to be less damning for Boris Johnson than initially feared, which helped Sterling reverse some of its initial losses.

What’s coming up?

Turning to today’s session the most high impact data release is likely to be the US GDP figures.

The latest estimate is expected to confirm US economic growth contracted in the first quarter of 2022, which could limit the appeal of the US dollar today.

Also of note will be the latest US initial jobless claims, where another elevated reading could also undermine USD demand. The focus for GBP investors will be the publication of the UK government’s cost of living plan. If the

Written by
Philip McHugh

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