Focus on Fed Minutes

Currencies

The British pound edged higher as UK CPI came in slightly above expectations, reinforcing concerns over persistent price pressures.

• UK CPI (MoM): -0.1% (Forecast: -0.3%, Previous: 0.3%)
• UK CPI (YoY): 3.0% (Forecast: 2.8%, Previous: 2.5%)
• Core CPI (YoY): 3.7% (Forecast: 3.7%, Previous: 3.2%)

Despite the slight upside surprise in headline inflation, core CPI aligned with forecasts, keeping Bank of England rate expectations steady for now.

The Japanese yen remained under pressure as BOJ board member Hajime Takata hinted at further rate hikes, warning of inflation risks. Markets are pricing in an 80% probability of a July rate increase to 0.75%, with 10-year JGB yields hovering near 1.425%.

The Reserve Bank of New Zealand delivered a 50bps rate cut to 3.75%, with Governor Orr signaling additional 25bps reductions in April and May. The RBNZ now projects a terminal rate near 3% by year-end, a shift aimed at supporting the weakening New Zealand economy.

US Markets

In the U.S., traders are closely watching the FOMC meeting minutes, which could offer insights into the Fed’s stance on inflation and rate cuts. Markets are also digesting U.S. housing data and mortgage applications, which could influence short-term dollar positioning.

Commodities

Gold (XAU/USD) remains firmly above recent highs, as traders adopt a wait-and-see approach ahead of the FOMC minutes.

• Expectations of further Fed rate cuts keep USD bulls defensive, lending support to gold.
• Rising concerns over President Trump’s proposed 25% tariffs on automobiles, pharmaceuticals, and semiconductors have fueled safe-haven demand.
• Any pullbacks in gold prices are likely to be viewed as buying opportunities, given the uncertain macro backdrop.

In the oil market, sentiment remains fragile amid global trade tensions. Traders are closely monitoring the impact of Trump's tariffs, particularly in the auto sector, as Japan formally raises concerns over potential economic disruptions.