The dollar had a very nice ride on the hawkish minutes which included the word “June” 6 times. However, we have already posted some skeptic voices, and here’s yet another one:

Here is their view, courtesy of eFXnews:

The USD has continued to trade with a firmer tone after Wednesday’s FOMC minutes signalled a significantly more hawkish FOMC stance than markets had been expecting. US front-end yields have remained elevated in response holding above 89bp, and the rates market has moved to increase pricing for a rate hike in June from about 12% to about 30%.

While the FOMC minutes were not the catalyst for USD reversal that we thought they might be, we would continue to favour fading these gains in the USD vs. non-commodity currencies for three reasons:

1- The minutes make clear that a June hike is data-dependent and we expect data will continue to be, quite mixed. We expect a soft reading on the Philadelphia Fed measure on Thursday.

2- “Most” FOMC members may not include key decision makers, including Chair Yellen. FOMC members Fischer and Dudley speak Thursday and could lean against a June hike. Yellen herself speaks on May 27; and,

3- The risk environment may not be robust enough to tolerate pricing for a June hike. The S&P500 has continued to lose ground after the past two sessions and USD gains will likely contribute to further upside in USDCNY and downside in WTI which could add to pressure on risk sentiment.