Fed speakers Williams and Lockhart both emphasised that June is a live meeting, and Lockhart believes markets are seriously under-pricing what the bounce back in 2Q US activity could mean for future interest rate increases. This helped the US dollar recover most of its session losses and the DXY dollar index finished essentially unchanged holding the $94.50 level. But it also raised wariness in equities as the VIX volatility index spiked up 6% to 15.6.
Although US inflation expectations did see much more of a boost overnight as 5-Year, 5-Year Forward Inflation Expectations gained 146 basis points. This was, no doubt, helped by oil rising up to its highest level in seven months. WTI oil gained another 1.6% overnight as API US crude inventories declined by 1.1 million barrels and Canada’s wildfires began to move back towards major oil facilities heightening production concerns.