US Dollar starts to break higher ahead of Nvidia earnings

NEW YORK (May 22) The US Dollar (USD) is starting to tick up as markets await a volatile 24 hours ahead which will commence with the release of the Federal Reserve (Fed) Minutes from the recent Federal Open Market Committee (FOMC) decision on why they kept rates stable. Even as the report can be a market-moving event, not much is expected this time as traders have heard from plenty of Fed speakers since Monday, all roughly advocating to keep interest rates at the current levels with no hikes foreseen. After that, the much-anticipated earnings from Nvidia (NVDA) could set the tone for either risk on or risk off ahead of Thursday, when a lot of US data points will be released. 

On the economic data front, a rather light Wednesday ahead with Existing Home Sales as a single big data point to be released. More activity is expected on Thursday, when the usual Jobless Claims numbers will be published. 

Daily digest market movers: Volatility starts to pick up

• Markets were caught by surprise by the inflation data from the United Kingdom. Monthly headline inflation picked up by 0.3% against 0.6% previous, more than the 0.1% expected. This sees markets repricing most major currencies a bit on the initial rate cut expectations from central banks. 
• Wednesday’s US calendar has kicked off with the Mortgage Bankers Association Survey for the Mortgage Applications for this week. Last week saw a steady 0.5% increase, with this week 1.9% as result.
• At 12:40 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee delivers opening remarks at the Holding Company Symposium hosted by the bank.
• At 14:00 GMT, Existing Home Sales numbers for April will be released. In March, home sales declined by 4.3%.
• Nvidia Earnings are expected near 16:00 GMT and could set the risk tone further for the rest of the trading day.
• Near 17:00 GMT, the US Treasury will allot a 20-year bond auction in the market. 
• At 18:00 GMT, the Fed Minutes will be released.
• Equities are retreating again despite US indices eking out gains on Tuesday. 
• The CME Fedwatch Tool is seeing a shift in pricing with the June projections near 98.4% for no change in the policy rate against 1.6% chance of a hike. September futures are now seeing a 50.6% chance for a 25-basis-points cut. 
• The benchmark 10-year US Treasury Note trades around 4.44%, near the high for this week.

FXStreet