• FOMC minutes in the spotlight today

• Mixed UK CPI probably keeps the door closed to a June move

• RBNZ surprises with its hawkishness; kiwi benefits

• Nvidia reports after the US market close

Hence, more time and more data are needed to measure the strength of domestic demand and evaluate the extent of the current economic soft patch. Having said that, certain Fed hawks are becoming more aggressive as they appear concerned about the restrictiveness of the current Fed rates, in defiance of Chairman Powell, who’s been quick to rule out rate hikes.

more time and more data are needed to measure the strength of domestic demand

The minutes from the May 1 Fed meeting will be published today and it will be interesting to see how high the bar was set for additional tightening. The market does not enjoy comments about rate hikes and will be on the lookout for such rhetoric again today.

With Governor Bailey putting great emphasis on the April inflation report, there was intense speculation about how low inflation could print. Indeed, the annual growth in headline inflation dropped to 2.3% from 3.4% in the previous month. However, the doves’ smiles have probably quickly disappeared as the core indicator that excludes food, energy, alcohol and tobacco printed at 3.9% versus expectations for a more significant easing.

rate cuts by the BoE might not be as close as certain market participants have hoped for

The surprise of the day, up to now, came from the RBNZ. The third meeting in 2024 caught both the analysts and the market somewhat off guard. Governor Orr et al maintained their recent hawkishness and repeated the usual statement phrase for the need to maintain monetary policy at restrictive levels to ensure inflation returns to target within a reasonable timeframe. But more importantly, the committee discussed the possibility of increasing rates at this meeting.

the committee discussed the possibility of increasing rates at this meeting.