Dollar under pressure ahead of inflation data, Powell's speech

Economies.com
2024-05-14 10:58AM UTC

Dollar fell in European trade on Tuesday against a basket of major rivals, on track for the second loss in a row, under pressure from lower US treasury yields, which undermine the dollar's standing. 

 

Now investors await important US inflation data, in addition to Fed Chair Jerome Powell’s speech this week, to look for clues on the future of monetary policy.

 

The Index 

 

The dollar index fell 0.1% today to 105.18, with a session-high at 105.35.

 

The index fell 0.1% yesterday, the second loss in three days as demand slowed down. 

 

US Yields 

 

US 10-year treasury yields fell by 0.4 basis points on Tuesday on track for the second loss in a row, which provides support for non-yielding assets. 

 

The developments came ahead of crucial US inflation data for April, in addition to Fed Chair Jerome Powell’s speech this week. 

 

US Rates

 

The markets are pricing in a 3.5% chance of a June Fed rate cut, and a 25% chance of a July cut, and a 63% chance of a September cut.

 

According to the Fedwatch tool, the markets expect two Fed interest rate cuts this year in September and November. 

 

US Inflation Data

 

Later today, US producer prices data will be released for April, while tomorrow, US consumer prices data is scheduled for release, and it’ll be crucial for gauging the likely path ahead of monetary policies. 

 

Powell

 

Fed Chair Jerome Powell is expected to speak in Amsterdam later today, and will take audience questions on the future of inflation and interest rates.

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