Falling Crude Oil Prices May Ease US Fed Hawkish Urgency, Macquarie Says

US monetary policy expectations may be nearing a turning point as lower crude oil prices and a fading repricing in rate markets reduce the need for a persistently hawkish Federal Reserve stance, Macquarie strategists said in a note on Monday. Macquarie analysts said that despite a significant retreat in crude prices over recent weeks, the US dollar has remained unexpectedly firm. The analysts attribute the resilience to a "hawkish surprise" delivered by Kevin Warsh during his June 17 Federal Open Market Committee press conference, which triggered a repricing across the overnight index swap curve and reinforced near-term tightening expectations. However, that adjustment now appears largely complete. With markets already having absorbed the shift in policy tone, Macquarie said there is limited scope for further hawkish repricing from the Fed chair in his upcoming Semi-Annual Monetary Policy Report. The bank said that, as a result, momentum in the greenback is expected to stall once that communication event passes. A broader easing in energy markets is also shaping the macro backdrop. Brent and WTI crude have both retreated as OPEC+ supply increases, and improved flows through.