Dollar Slips for Second Day

President Donald Trump has reasserted that he is nearing a deal with Iran to end the more than three-month-long conflict after brokering a halt to renewed hostilities that saw Israel and Iran launching volleys of ballistic missiles at each other. Negotiations are expected to continue this week via intermediary Pakistan, but there is hope that some details could be resolved in the coming days. 

U.S. CPI figures for the month of May are due to be released tomorrow at 8:30 am Eastern with the Year-over-Year figure expected to print at 4.2% - the April Year-over-Year figure was 3.8%. A hot print would cement the expectation that the Federal Reserve’s next policy move should be an interest rate hike, with Traders already pricing in 25bps of tightening by December.

CAD

The Canadian Dollar is up against the Greenback this morning as risk sentiment leans positive. International Merchandise Trade for the month of April is due to be released at 8:30am and is expected to show a surplus of C$2.55b – the March figure was C$1.78b. Beyond today, all eyes are on the Bank of Canada’s rate decision tomorrow, where they are widely expected to hold their key interest rate at 2.25% for the fifth consecutive meeting following back-to-back quarters of GDP contraction. 

JPY

The Japanese Yen is flat to the Buck this morning as it continues to trade near key intervention levels. Trader’s positioning seems to indicate that they recognize the risk of intervention by Japanese officials, but that they anticipate little to no lasting impact from any such event. The Bank of Japan is scheduled to meet a week from today, with a 95.1% chance of an interest rate hike at that meeting. A former BoJ official also indicated that another hike is likely to come as soon as October as officials race to stay ahead of the curve in fighting inflation.