Feds Dudley Strikes a Hawkish Tone

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Dudley’s comments lift the dollar
USD gained across the board yesterday, after NY Fed President William Dudley said there’s no reason to change Fed’s hike plans, even if the inflation is still lower than the target, because the labor market keeps tightening. His comments were on the same page of those made by Chairman Yellen last week.
USD/JPY gained yesterday, hitting resistance around 111.70 (R1); this raise suggests that the short-trend outlook for the pair could have turned in a positive direction.
The most interesting development in our opinion is that it seems like two different group of policymakers are now forming inside the Fed: a hawkish one (Dudley, Yellen) and a more cautious one (Kashkari, Kaplan, Evans). Investors are still pricing the next hike for June 2018, so we see the possibility for positive USD reactions in case of inflation growth in the next months.

No surprises from the RBA minutes
The RBA minutes, released overnight, reserved no surprises for the investors: the policymakers maintained a balanced tone overall, as widely expected, with some positive remarks on the labor market. We see the case for a more optimistic RBA in the near future, since the latest jobs data showed great employment improvement.
AUD/USD slid yesterday, failing to reach a higher high to confirm a possible short-term uptrend for the pair. This, in our opinion, moves the pair to a flat short-term outlook.

Today’s highlights:
Europe: Sweden’s unemployment rate for May; Germany’s PPI data for may
US: current account balance for Q1
New Zealand: GDT (Global Dairy Trade) index
Speakers: Fed Vice Chairman Robert Fischer, Dallas Fed President Robert Kaplan, Boston Fed President Eric Rosengren, SNB Chair Thomas Jordan, ECB Executive Board member Benoit Coeure, BoE Governor Mark Carney

Support: 111.40 (S1), 110.80 (S2), 110.30 (S3)
Resistance: 111.70 (R1), 112.15 (R2), 112.50 (R3)

Support: 0.7565 (S1), 0.7515 (S2), 0.7500 (S3)
Resistance: 0.7635 (R1), 0.7675 (R2), 0.7700 (R3)

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