Dollar gives up one-week high ahead of Waller's remarks

Economies.com
2024-05-24 12:04PM UTC

Dollar fell in European trade on Friday against a basket of major rivals, giving up one-week highs and on track for the first loss in seven days on profit-taking.

 

Despite the decline, the greenback is heading for the best weekly profit in a month and a half after the Fed's latest meeting minutes reduced the odds of multiple rate cuts this year. 

 

Now investors await important remarks by Fed official Christopher Waller later today in addition to consumer sentiment and US inflation data. 

 

The Price

 

The dollar index fell 0.2% today to 104.82, with a session-high at 105.12. 

 

The index rose 0.15% on Thursday, the sixth profit in a row, marking a one-week high at 105.12 following strong US data.

 

Weekly Trades 

 

The index is up 0.5% so far this week on track for the second weekly profit in three weeks, and the largest since early April.

 

Fed’s Minutes 

 

The minutes showed that Fed officials are concerned about the suitable timing of a rate cut, with several members expressing concerns about consumers using riskier financing methods to cover costs due to inflation.

 

Fed officials pointed to the persistent risks of inflation, with factors including geopolitical events, and they focused on the impact on consumers, especially low-income workers. 

 

The Fed recently announced a decision to maintain interest rates unchanged at below 5.5% at the May meeting. 

 

Strong Data

 

Recent US data showed unemployment claims fell more than expected last week while both the services and manufacturing sectors expanded. 

 

US Rates

 

The odds of a Fed July 0.25% rate cut are currently standing at 14%, while the odds of a September cut fell to 54%. 

 

According to the Fedwatch tool, investors now only expect one interest rate cut by the Federal Reserve this year. 

 

Waller

 

Later today, Famously hawkish Fed official Christopher Waller is expected to speak later today about the future of inflation and interest rates.

 

Otherwise, the University of Michigan will release important data on consumer sentiment and five-year inflation forecasts. 

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