Dollar Slips Before Fed, Options Sentiment Improves
The dollar traded lower versus most of its Group-of-10 peers ahead of the Federal Reserve policy decision while Iran and Israel exchanged fire for a sixth day.
The Bloomberg Dollar Spot Index drops as much as 0.2%, following its best daily performance in a month. President Donald Trump met with his national security team to discuss the escalating Middle East conflict, fueling speculation that the US may join Israel’s attack on Iran
One-month risk reversals trade in favor of the topside for the first time since early April; while the Fed is expected to keep rates unchanged at this meeting, US rates traders have made a record futures bet that it will skew more dovish right after Chair Jerome Powell’s term ends in 2026
Treasury 10-year yields are little changed around 4.38%; the top US bank regulators plan to reduce a key capital buffer by up to 1.5 percentage points for the biggest lenders after concerns that it constrained their trading in the $29 trillion Treasuries market.
GBP/USD rises 0.4% to 1.3476; UK consumer prices rose 3.4% y/y last month, higher than the 3.3% increase estimated by economists in a Bloomberg survey
The Bank of England will decide on its interest rate policy on Thursday; overnight volatility rises 549bps to 15.38%, highest since May 8, before paring the advance
EUR/USD gains 0.4% to 1.1523; large expiries seen at 1.1500 in €2.86b: DTCC
EUR/SEK up by 0.5% to 11.0232; highest since May 1; the Riksbank cut its key rate to 2%, the lowest level in 2 1/2 years, and said even more easing is possible.
AUD/USD up by as much as 0.6% to 0.6514, leads G-10 gains.
Source : Bloomberg
