Forex today: Dollar tanks on Fed's dovish rhetoric, raising odds of 50bp cut

• The Dollar tanked as markets are pricing in a higher chance of a 50bp cut.
• US 2-year treasury yields lost ground from 1.84% to 1.76%. 

The US Dollar and rates dropped following Federal Reserve James Williams advocating for significant easing which was followed up by Clarida underscoring the need for "swift" and "preemptive" action by the Fed. The Dollar tanked as markets are pricing in a higher chance of a 50bp cut by the Fed in July.

US 2-year treasury yields lost ground from 1.84% to 1.76%, while the 10-years fell from 2.08% to 2.03%. Indeed, the markets have priced 38bp of easing at the 31 July meeting. Yesterday, they only pricing in 33bp yesterday. Then there were also reports of confrontations between the US and Iran which helped to lift the price of oil. In early Asia, we had the Japanese CPI for June 2019 with a headline of 0.7% y/y, in line with expectations.

Currency action

• Australian employment data brought a softer headline data yesterday, but the AUD/USD pair still climbed and scored above 0.7040 and reached as high as 0.7082, a three month high.
• EUR climbed from 1.1210 to 1.1270. 
• GBP/USD rallied from 1.2400 to 1.2544.
• USD/JPY dropped from 108.00 to 107.40 – a one-month low. 
• NZD rose from 0.6740 to 0.6871 which was a three-month high. 

Key notes from Wall Street 

• Wall Street ends mixed following Fed speaker's solid reminders

• US Dollar Index technical analysis: DXY gets slammed on Fed’s William comments