USD positioning ahead of the 18-19 June FOMC meeting remains a key focus in financial markets. Intra-day volatility lifted yesterday after a report from the Financial Times suggested the Fed was close to signalling tapering of its asset purchases, but could balance this by stating future policy moves (up or down) would be dependent on the US economic outlook. This two-way policy risk is typical central bank guidance and has actually been part of the Fed’s communication since the 1 May FOMC meeting. The recent moves in the USD suggest broader market expectations for this week’s FOMC may have been tempered. Nevertheless, interest will be on any signals the Fed provides.
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