FX Update: Dollar weakness remains the name of the game
FX Update: Dollar weakness remains the name of the game, which has been concomitant with the pricing out of Fed rate hike potential in the remainder of 2017. Fed fund futures were in late trade yesterday discounting a 44% probability for a rate 25 bp hike before year-end. This follows weak U.S. inflation data for June last week, along with underwhelming retail sales and manufacturing-sector data readings. Tokyo markets reopened after a long weekend in Japan and USD-JPY fell to a near three-week low of 111.98. The weakness in the dollar also weighted on Asian stock markets today, which lent a backdrop support to the yen. USD-JPY has now fallen in five of the last six session, correcting from a four-month high 114.49 over this period. EUR-USD rallied to a new 14-month high of 1.1538, and Cable lifted above the highs it saw yesterday. The biggest mover has been AUD-USD, which is up about 1.5%, making a 26-month high at 0.7923. The minutes from the RBA's early-July policy meeting lit a fire under the Aussie, noting that a tightening labour market and strong house prices "warrant careful monitoring."