PT Solid Gold Berjangka | Dollar Regroups Before Inflation Test; Yen Brushes Off Tokyo CPI
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Solid Gold Berjangka | The dollar was licking its wounds against peer currencies on Friday after a downward revision to U.S. GDP in the first quarter suggested room for a rate cut this year, but investors were bracing for inflation data.
According to official data, the U.S. economy grew at an annual rate of 1.6% from 1 month to 3 month, up from a pre-estimate of 1.3% after a downward revision in consumer spending.
On the other hand, New York Federal Reserve Governor James Williams said he felt there was enough evidence that monetary policy was helping to lower inflation.
U.S. Treasury yields were up 14 percent at木曜日105.17 on Thursday, while revised GDP data fell.
The dollar index, which measures the currency against six major peers, last dipped as low as 104.76 overnight consolidated around 104.63.
Williams’ data revisions and comments revived hopes of a cut earlier than later, according to Matt Simpson, senior market analyst at City Index.Traders said they saw a rise in PCE prices with the revised data and focused on lower consumption and growth.
According to the CME Group’s FedWatch tool, the market now has a 9% chance of a rate cut that will start in May, up from 55% the previous day’s 51%.
Markets are currently preparing for the release of the Fed’s preferred inflation measure, the Personal Consumption Expenditure (PCE) Price Index, for further indicators on how the central bank will proceed with interest rate cuts later this year.
U.S. consumer price inflation data has rekindled expectations of a rate cut this year, driving the dollar down across the board and putting it on track to post its first monthly loss in 2024.
But expectations for a rate cut this year have been wobbling amid signs of sticky inflation, with consumer sentiment on Tuesday’s data rising surprisingly recently.
Against the dollar, the yen slightly accelerated from the previous month, the central bank will raise interest rates this year, even after the data showed Tokyo core consumer prices, leading indicators of national figures accelerated from the previous month to maintain market expectations alive.
After a temporary weakening, the Japanese currency held around 156.77 per greenback and remained off a four-week low of 157.715 per dollar on Wednesday.
The yen is steadily approaching a 34-year trough of 160.245 from a month ago, a level that market participants suspect has triggered two rounds of dollar selling intervention by Tokyo.
Elsewhere, the euro was flat at flat1.083225 after touching a two-week low of overnight overnight overnight at 1.07885.
Eurozone price data is due on Friday, following a stronger-than-expected January inflation reading for Germany on Wednesday.
Sterling was unchanged on Tuesday for the first time since Tuesday1.2734 after reaching Tuesday1.2801 on March 21.
Source: Reuters