FX Closing Comments

The major event today was the release of the minutes from the March 28 FOMC meeting. The emphasis, which markets were quick to pick-up on, was that feeling that rates are indeed peaking. The prospect of peaking rates sent equity markets sharply higher and kept the Dollar under pressure. There was also some fear in the minutes that the Fed might tighten "too much" and restrict growth potential. The prospect of peaking, and eventually declining rates, combined with rising EU and Japanese rates, is making Dollar bulls a bit nervous, irrespective of the lingering "twin deficit" concerns. Tomorrow will give us the equivalent UK document --the MPC minutes, which are expected to be similarly instructive in terms of the likely direction of UK rates.