Consolidation ahead of Fed thinking

The dollar is trading with a bid tone ahead of the FOMC minutes tomorrow evening, with some early speculation that the minutes could be a little more hawkish than the current thinking. The theory followed an article from the San Francisco Federal reserve that US Q1 GDP estimates have been understated.

Stop the Press: As I type the euro drops over 120 points following comments from ECB executive member Benoit Coeure that highlights the ECB are aware of seasonal patterns in fixed income markets with regards to liquidity over the traditional summer periods in Europe and that the ECB intends to increase its QE programme in May and June ahead of the low liquidity period. The comments have reiterated the ECB stance of a 2% inflation target as President Draghi commented that the ECB will continue with the planned QE programme.

The Asian session was dominated by contrasting pictures from across the Tasman Sea as the RBA minutes from the May meeting suggested a rate cut was still a possibility despite the removal of the easing bias at the meeting. The RBNZ then released their latest inflation projections that saw an increase in the 1 year expectations to 1.32% from 1.11% as the 2 year forecast jumped to 1.85% from the prior 1.80% prediction.

The data releases are centred concentrated around the European session with inflation data released from the EU and UK as the latest sentiment thinking from Germany will be revealed in the form of the ZEW survey.

EUR/USD
Support 1.1130-1.1100-1.1055 | Resistance 1.1280-1.1410-1.1530

USD/JPY
Support 118.90-118.20-117.50 | Resistance 120.50-120.85-121.55

GBP/USD
Support 1.5580-1.5525-1.5440 | Resistance 1.5795-1.5825-1.5945