Most of the US dollar rally over the past two months was built on the idea that the Fed was moving toward rate hikes but the closer you look the less certain it seems.
The market is acting like it has been lied to and is now taking vengeance on the US dollar.
US dollar woodshed
Sure there are a few vocal FOMC hawks — Fisher, Plosser, George & Bullard — but the rest of the gang is preaching patience and some don’t see any inflation on the horizon. Or any reason to hike rates.
The turnaround in the dollar today has been massive. The USD rallied to session highs in the moments before the minutes but that was the wrong move and the market has completely turned around.
Cable is leading the turnaround and has rallied 130 pips from the 1.6034 session low. The commodity currencies are also more than 100 pips above lows.
