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14/06/24
129
USD Slightly Lower
On Friday, the U.S. dollar was slightly lower and the U.S. dollar index, which measures its strength against 6 other major currencies, traded down 0.1% at 105.125.
Despite the small declines, the dollar is on track for slight gains this week after the Federal Reserve kept the funds rate steady at between 5.25% and 5.5% but reduced the number of cuts forecast this year from three in March to only one.
Those gains were however limited after both U.S. producer and consumer prices came in lower than expected, indicating that inflationary pressures were cooling, while initial claims for unemployment benefits last week increased to a ten-month high.
Despite the Fed’s dot plot for June indicating a median forecast of only one rate cut this year, Goldman Sachs is still expecting the first rate cut to happen in Sept. and another cut in Dec.
The U.S. bank said its inflation forecast for 2024 was now slightly lower than the FOMC’s, which Chair Powell has labeled as reasonably conservative. With 2 rounds of better inflation data now available, analysts believe that if the next 3 rounds are similar, the Fed would likely push a cut through in September.
EUR/USD dropped to 1.0708, 0.3% lower and on track to register weekly losses of about 0.8% with the European region experiencing political turmoil.
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