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13/06/24
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USD Drops After Fed Meeting, CPI; PPI Release Next
On Thursday, the U.S. dollar dropped as traders evaluated the competing factors of a more hawkish Federal Reserve versus benign U.S. inflation.
The U.S. dollar index, which measures its strength against 6 other major currencies, was down 0.3% at 104.340, after hitting its strongest level since May earlier this week.
The dollar fell immediately after the U.S. inflation report, which showed consumer prices in May were flat month-to-month versus market expectations of a rise of 0.1%.
It later trimmed some of those losses when the Fed kept the funds rate steady at between 5.25% and 5.5% and outlined that policymakers’ projection for the number of cuts this year declined to only one, from March’s forecast of three.
Goldman economists said in a note they still expected the first rate cut in Sept. and another in Dec.
Thursday’s PPI release is now solidly in focus, with the headline figure in May likely to show monthly growth of 0.1%, a decline from 0.5% growth the previous month.
The core PPI release, excluding volatile energy and food prices, will likely show monthly growth of 0.3%, a decline from 0.5% growth the prior month.
Analysts at ING said in a note a soft PPI reading would increase expectations of another 0.2% core PCE reading month-on-month.
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