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20/05 – Dollar volatile after Fed minutes

GBP: Retail sales tomorrow morning

EUR: PMIs tomorrow should ensure strong week

USD: Fed tapering talk not non-existent


Sterling struggled a tad yesterday, marked down by increased concerns over how long the Bank of England will choose to look through inflation pressures in the UK and just how prevalent the so-called Indian variant of the virus remains.

On the first point, Bank of England speakers will likely outline their thoughts in the coming weeks but until CPI is north of 2% – currently 1.5% – then the battles are a bit fake.

On the latter point, containment of this variant seems to be working but the pound will have to keep an eye on further variants that may arrive as the borders open to travel and tourism.

By the time you read this tomorrow, we expect sterling higher following the latest round of retail sales data.


A slightly stronger USD dented other currencies more than the euro yesterday that has managed to keep an air of stability this week. Tomorrow’s PMIs will likely determine just how much of a positive week the currency has but we must keep an eye on risks in the Mediterranean from further migration movements from Africa.

Political pressure over border controls in Spain and Italy have reached a European level in the past and crossings are said to be increasing already.

US dollar

News from the Federal Reserve showed, as we had thought, that some members of the Fed favoured talking about tapering stimulus at upcoming meetings, upgrading the chances that we see some dissent within the central bank’s decisions. This meeting took place before the 4.2% inflation print and hence the move into the USD overnight.

That move has faded this morning however and should jobless claims miss estimates later this afternoon we expect the wider pulls of dollar weakness to continue.


It was an interesting day for crypto markets yesterday with some tokens losing as much as 45% through the day before staging a recovery. Contagion spread to tech shares and started to see some flows into the USD on haven bets.

Crypto is the tail wagging the market dog and further volatility in coming sessions will make for interesting reading in more structured markets.

Market rates

Today’s interbank rates at 08:20 against sterling. Movement vs yesterday.

Euro€1.158 ↓
US dollar$1.413 ↓
Australian dollar$1.821 ↓
South African randR19.88 ↑
Japanese yen¥154.1 ↓

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.