FOMC: a potent force ebund dollar's rally - BBH

Analysts at Brown Brothers Harriman explained that the US dollar bottomed against nearly all the major currencies on May 3. 

Key Quotes:

"The hawkish April FOMC minutes that began swaying opinion about the prospects for a summer rate hike were not published until two weeks later, and the confirmation by NY Fed President Dudley was not until May 19.

Nevertheless, the shift in expectations for a resumption of the Fed's gradual normalization of monetary policy is a potent force that has fueled the greenback's recovery.  The place to look for investors' anticipation of a rate hike is not in the long end of the curve but the very short end.  For medium- and long-term investors, it is immaterial whether the Fed hikes in June or July.  The implied yield of the August Fed funds futures contract (which is the closest proxy for June and July) has risen 15 bp, while the US 2-year yield has risen 20 bp.  

Anything that shifts these expectations would impact the dollar.  There are two broad categories of events that could alter expectations for US monetary policy:  foreign and domestic. The biggest foreign threat which several, though not all, Fed officials have identified is the UK referendum on June 23."