🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Dollar slips lower ahead of Fed meeting, CPI data

Published 2024/06/12, 10:18
© Reuters.

Investing.com - The U.S. dollar retreated Wednesday, falling back after hitting a four-week high overnight ahead of the conclusion of the latest Federal Reserve policy meeting. 

At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% lower at 104.775, after touching its strongest level since May 14 at 105.46 overnight.

Dollar awaits Fed meeting

The dollar has slipped back from recent highs, but the U.S. currency has been in demand after Friday’s stronger-than-expected jobs report, as traders pared back bets for Fed rate cuts this year.

With this in mind, all eyes will be on the release of crucial U.S. consumer price data and the Fed meeting, including fresh interest rate forecasts, later Wednesday.

The May CPI is expected to rise just 0.1% on the month, an annual rise of 3.4% - still considerably above the Fed’s 2% medium-term target.

The U.S. central bank is not expected to change interest rates this time around, and traders will be looking to see if the Fed officials change their expectations for the number of interest rate cuts this year.

“What could move the markets are two things. Should the Fed remove the sentence 'In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective' from its statement, short-dated US yields and the dollar could drop,” said analysts at ING, in a note.

“Equally, Chair Powell typically delivers a dovish press conference and the dollar has ended lower on the day over the last four consecutive FOMC meetings. The same could happen today.” 

UK economy failed to grow in April

GBP/USD rose 0.1% to 1.2750, with sterling rising despite data showing Britain's economy showed no growth in April, caused in large part by rainy weather.

Gross domestic product was flat in April, after a 0.4% month-on-month rise in March.

The figures followed labor market data on Tuesday that showed falling employment and rising unemployment, but continued strong wage growth.

EUR/USD rose 0.1% to 1.0745, after data confirmed that German inflation rose in May due to higher services prices.

German consumer prices, harmonised to compare with other European Union countries, rose 2.8% in May from a year earlier, above the 2.4% year-on-year rise seen in April.

“We think EUR/USD could find some support from events in the U.S. today. However, 1.0800 will now probably mark strong intraday resistance,” ING added

Japan PPI does little to support yen

In Asia, USD/JPY traded 0.1% higher to 157.26, with the yen receiving little support from hotter-than-expected PPI data, which came just before a Bank of Japan meeting this week.

The BOJ is set to meet on Friday and is likely to keep rates unchanged. But the central bank is also expected to tighten policy further by reducing its pace of bond purchases.

USD/CNY slipped marginally lower to 7.2538, remaining close to six-month highs after mixed Chinese inflation data raised concerns over an economic recovery in the country. 

While producer prices shrank at its slowest pace in 15 months in May, consumer prices grew less than expected, barely staying out of contraction territory.


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.