• Gold down $15 to $1959
  • S&P 500 down 32 points to 4125
  • US 10-year yields up 3.4 bps to 3.73%
  • WTI crude oil up $0.98 to $73.89
  • USD leads, NZD lags

It was a light day for economic data but an opportunity for Fed officials to highlight where they stand on ongoing rate hikes. That was led by Waller who advocated for either hiking in June or skipping a meeting and teeing up July. He said what comes at the next meeting will depend on the economic data, particularly this Friday's PCE report and the May CPI report just before the FOMC.

The dollar was already higher but gained further on his comments with USD/JPY particularly strong and reaching as high as 139.39, which is the best level since November 29. The market is wrangling with the debt ceiling talks but also worried about the potential for rate hikes continuing due to stubborn inflation --something that was highlighted in the FOMC minutes.

Commodity currencies were hit hard led by NZD after yesterday's dovish RBNZ comments. The kiwi ultimately finished down by more than 2% while CAD fell 0.6% despite a solid rally in oil. USD/CAD ended the day up 87 pips to 1.3594, which is the highest since May 3.

One spot where the bulls held the line was in cable. Dollar buyers repeatedly tried to take out the 1.2350 level but couldn't get through as the mid-April lows held.

In contrast, the euro broke the May and April lows to the lowest since March 27 and down to 1.0750 as the market frets about economic weakness. Much of that is dollar strength but Goldman Sachs highlighted waning confidence in its year-end 1.10 call in a sign that more selling could be coming.

FX news wrap