USD to move lower in line with US yields - RBS

FXStreet (Guatemala) - RBS strategists noted that the US data calendar was busy this past week but slows down considerably in the week ahead, with home sales, both new and existing, are the main releases.

Key Quotes:

“While there are few data events, there are several Fed events next week - the Fed is one of several G10 central banks due to release policy meeting minutes next week and seven FOMC participants are due to speak, though not all of them are addressing monetary policy”.

“After the FOMC issued a nearly identical post-decision statement in April, the content of the minutes may not include any significant divergence in terms of the outlook for monetary policy. Participants will likely reference the strength in more recent indicators, though keep in mind this meeting took place before the strong NFP and the drop in the unemployment rate in April”.

“The closed-door meeting in April suggests that the formal discussion of updating the Exit Strategy Principles has begun – we do not expect any updates to be completed until the June meeting, though that discussion may be referenced in the April minutes. With US events expected to be fairly mundane next week, positioning may remain a major driver of FX markets – we see the pain trade still favouring lower US interest rates and a weaker USD”.