Yesterday, the dollar fell alongside U.S. interest rates following a softer-than-expected CPI report. However, the declines in both rates and the dollar were moderated after the FOMC meeting. Today, the dollar has regained some ground and is trading with a slightly firmer bias against G10 currencies. Nevertheless, trading remains subdued with narrow ranges prevailing.
The S&P 500 and NASDAQ surged to new records yesterday before consolidating post-FOMC meeting. They continue to trade with a firm bias today, particularly the NASDAQ.
Gold is trading softer and appears poised to end its three-day rally, during which it gained about 1.3%. August WTI is also softer after advancing over the past three sessions.

Asia Pacific Markets
Australia's May employment report exceeded expectations, with the swaps market indicating virtually no chance of an RBA rate cut at next week's meeting or in the second half of the year. After closing below $0.6600 at the end of last week—the first time since May 8—the Australian dollar surged following the U.S. CPI report, briefly exceeding $0.6700. It has since pulled back to around $0.6655 post-FOMC and eased further to about $0.6640 today.
The dollar weakened from around JPY157.20 to approximately JPY155.75 following the softer-than-expected U.S. CPI.

European Markets
Today's aggregate April industrial production figures had minimal market impact. Similarly, tomorrow's aggregate April trade balance is also unlikely to be a significant market mover. The market seems to have already absorbed the end of the trade shock. In Q1, the euro area reported an average monthly trade surplus of around 20 billion euros. Historical comparisons are distorted by COVID-19 and terms-of-trade issues.
The softness in the U.S. CPI and the drop in U.S. rates spurred a risk-on environment, leading to a rally of more than a cent in the euro to just above $1.0850. Today, it has been confined to a narrow range of roughly $1.0800-$1.0815.
The U.S. CPI offset the disappointing UK GDP figures, pushing sterling to $1.2860, its best level since early March.

American Markets
Today's PPI is overshadowed by yesterday's CPI and the FOMC meeting. The CPI came in slightly lower than expected, causing U.S. yields to unwind the employment-induced gains. As anticipated, the Fed's median projection reduced the number of rate cuts this year from three to one, with one of those cuts now shifted to 2025, and four projected for next year.
The Canadian dollar initially benefited from the U.S. dollar's setback and the risk-on environment, rising to its best level of the week. However, as the greenback began to recover and risk appetites stabilized, the Canadian dollar retreated.