Dollar Ticks Higher for a Third Day as Markets Await Fed Minutes

The Dollar Index firmed to 100.69, up 0.09% and its third straight higher close. The move came alongside a broad rise in Treasury yields — the 10-year added 4.2bp to 4.521%, the 30-year rose 4.2bp to 5.035%, the 5-year gained 3.5bp to 4.246% and the 3-month added 3.5bp to 3.725% — while the 20+ Year Treasury ETF fell 0.81%. Equities wobbled alongside the bid: the Nasdaq dropped 1.26%, the Nikkei fell 2.93% and the VIX rose 1.06% to 17.14. Gold slipped 0.49% even as yields rose, a pairing the desk has flagged before. Not every dollar pair joined in — USD/JPY and USD/CAD both eased on the session.

The policy backdrop remains a hike debate, not a cut debate: the Fed funds target sits at 3.50-3.75%, and markets are pricing the odds of a further hike rather than easing. The FOMC's Meeting Minutes are due today (HIGH IMPACT) — minutes from the June 16-17 meeting, the first under Fed Chair Kevin Warsh. They land against a backdrop of yields backing up across the curve and a New York Fed survey showing one-year inflation expectations at their highest since 2023. Fed's Williams said inflation is still too high but that he is a little more positive on the near-term outlook as energy prices decline. A US 10-year auction is due later today.

EUR/USD eased 0.11% to 1.1428, holding just below 1.145 as ECB's Schnabel's hawkish war-risk warning offset Lagarde's dovish "more balanced" inflation/growth remarks. GBP/USD slipped 0.11% to 1.3374 — detailed below. USD/JPY eased 0.12% to 161.89, the one major not joining the dollar's bid, with a narrower 161.662-162.188 range reflecting safe-haven demand amid the equity slide. USD/CAD fell 0.13% to 1.4186 on broad dollar softness tied to weak US jobs data, though OPEC+ supply increases, USMCA uncertainty and a dovish Bank of Canada continue to cap the loonie's gains.

Cable eased 15 pips (-0.11%) to 1.33741 from 1.33892 in the last completed session, as oil's jump above $73/bbl amid Strait of Hormuz tension revived inflation and safe-haven dollar demand, even with markets leaning toward a Bank of England hike rather than a cut by year-end. That followed a stronger run: sterling had rallied 1.1% the prior week, its best week in three months, as the dollar broadly fell after a soft June US payrolls print of 57,000 jobs. The next catalyst is today's FOMC minutes.

The day's headline event is the FOMC Meeting Minutes (HIGH IMPACT), due today, covering the June 16-17 meeting. Ahead of that: a US 10-year Bond Auction (previous 4.54|2.6), Crude Oil Inventories (forecast -1.0M, previous -3.8M) and Final Wholesale Inventories m/m (forecast 0.3%, previous 0.3%). Later: Consumer Credit m/m (forecast 16.9B, previous 20.7B). Elsewhere, Japan's Economy Watchers Sentiment (forecast 44.3, previous 43.6) and M2 Money Stock y/y (forecast 2.4%, previous 2.5%), China's CPI y/y (forecast 1.1%, previous 1.2%) and PPI y/y (forecast 4.1%, previous 3.9%), the UK's RICS House Price Balance (forecast -31%, previous -35%), New Zealand's BusinessNZ Manufacturing Index (previous 49.9), a German 10-year Bond Auction, and a speech from Buba President Nagel round out the calendar.