The USD (and FOMC) is unlikely to change course

The US dollar looks set to eke out small gains against most currencies this week as US bond yields rose further and equities whipsawed. While the net effect of the FOMC’s policy announcement and today’s US payrolls report on currency markets was negligible, we think an extremely tight US labour market will keep the Fed on track to continue to tighten aggressively, even if Fed Chair Powell effectively ruled out a 75bp hike in June.