Mixed UK construction data.

The UK construction PMI index edged higher to 51.6 for May from 51.1 previously, above expectations of 51.0 and the fourth successive reading above 50.0. There was further strength in the commercial sector, but residential activity declined for the sixth successive month and, excluding the 2020 pandemic period, it was the sharpest rate of contraction for 14 years.

The IBD consumer confidence index improved marginally to 41.7 from 41.6 previously, but significantly below market expectations of 45.0, maintaining reservations over the spending outlook.

There was little net change in market expectations surrounding Fed policy. The chances of a rate increase at the June meeting dipped to just below 20%. The chances of a July hike held just above 60%.

The dollar was held in tight ranges with markets in a holding period ahead of next week’s Fed policy meeting. Major currencies overall were held in tight ranges.

The Bank of Canada will announce its latest interest rate decision on Wednesday. Consensus forecasts are for rates to remain on hold at 4.50%, but with some speculation that there could be a hike. Forward guidance will be a key element from the bank.

Tight ranges prevailed on Tuesday with no major developments. The Euro drifted lower as the dollar secured a tentative advance. EUR/USD dipped to lows at 1.0675 before a recovery to near 1.0700 and traded just below 1.0700 on Wednesday. Treasuries lost ground after the New York open before regaining some ground. USD/JPY peaked at 140.00 before a retreat to 139.70 with further losses to 139.30 on Wednesday.

The Swiss franc was held in tight ranges. EUR/CHF settled just above 0.9700 with USD/CHF edging higher to 0.9075 from 0.9100 highs. Sterling held steady overall with Bank of England expectations providing net support. GBP/USD settled around 1.2420 from 1.2390 lows.

Commodity currencies secured a tentative net advance. Reserve Bank of Australia Governor Lowe reinforced the need to combat inflation. Australian Q1 GDP increased 0.2% compared with expectations of 0.3%. AUD/USD peaked at 0.6685 before fading slightly.  USD/CAD found some support below 1.3400 and traded just above this level on Wednesday.