Interbank Market News Scan: I expect the EUR/USD to close above 1.0808 tomorrow.

The Stats …

30-Day Federal Funds Options (ZQV3): 94.99

Source: CME Group.

Effective Federal Funds Rate: 5.08%

Discount Window: 5.25%

Interest on Reserve Balances: 5.15%






Source: Board of Governors-Federal Reserve System.


Source: MarketWatch.

Today’s Definition: Effective federal funds rate

“A volume-weighted median of transaction-level data collected from depository institutions.” — Board of Governors-Federal Reserve System.

Note that federal funds are excess reserves held at a federal reserve bank that commercial banks and other financial institutions loan each other overnight. Banks may lend each other their reserves where they may be short funds needed to settle deposit withdrawal requests or are short the amount of reserves necessary to meet Federal Reserve System reserve requirements.

Today’s takeaway. I expect EUR/USD to remain close to spot tomorrow night.

At the time of this writing, retail binary options traders are expressing a 69% chance that the EUR/USD will exceed 1.0808 tomorrow evening around 7pm. My bet is that the EUR/USD continues to fall. As of 8:32 PM EST traders have been putting downward pressure on the EUR/USD with trade around 1.0817.

As of 8:34 PM EST, the last quote of the 30-Day Federal Funds Futures/Options was 94.99 which indicates to me that traders expect a decrease in the effective federal funds rate. The EFFR is currently at 5.08%.

Federal Open Market Committee meeting minutes for 2-3 May 2023 are due out on 24 May 2023 at 2pm. The next FOMC meeting is scheduled 13-14 June 2023.

Alton Drew

21 May 2023

Disclaimer: The foregoing should not be considered legal or financial advice. It is presented for information purposes only. Please seek out advice from an attorney or financial advisor.