Quieter times are expected for The US Dollar over the next few weeks after recent economic releases initially showed mixed signals with their economy. Yesterday’s April Inflation release showed a slight drop as expected, as Inflation excluding food and energy increased by a mere 0.3% against a 0.4% projection.
Interestingly this marked the first slowdown in six months, and when you add this alongside no upside growth for Retail Sales last month its added fuel to the fire that the US economy may be dragging. Federal Reserve members now have reasons for concern surrounding inflation and could potentially push the higher for longer narrative for that little bit longer.
Sticking with The US we have the weekly Jobless Claims to be released this afternoon which as ever will be closely watched by The Federal Reserve again in reference to whether they believe they can start transitioning towards a rate cut scenario, in line with The European Central Bank and The Bank of England.
We round the week off with a fairly quiet day tomorrow, however nonetheless we do have the Euro-Zone’s Inflation release at 10am. Inflation including and excluding food and energy prices are both set to drop lower again, with Core Inflation (excludes food and energy prices) forecast to drop to 2.7% last month. If this does meet expectations then we should see some Euro weakness against their currency pairs as interest rate cuts would ramp up, with the only question being when, as opposed to if.
