The US dollar has taken a step back this week as moves have been driven largely by localised data and central bank developments during a quieter week for the US
2024-05-22 23:15:00is under control. The sentiment presented is in stark contrast to that revealed in the Fed minutes last night where the overall message was that the committee’s confidence in getting inflation back to 2% has been negatively affected and it will take longer to regain it. The minutes were recorded before the most recent, lower US CPI print but emphasises that it is going to take more than one decent print to get the Fed seriously considering interest rate cuts.
Yesterday, UK inflation data revealed that consumer inflation slowed in April but not as much as expected. One sticking point was that services inflation – a very specific measure of inflation which has been stubbornly elevated – rose above the maximum anticipated level estimated by analysts and economists polled by Reuters.from August to November with just one full rate cut priced in for this year. The pound and Gilt yields rose as a result, with GBP/USD following suit.
The committee discussed raising interest rates and expressed that the economy has little capacity left to absorb higher interest rates, a tricky situation to be in. Markets have therefore delayed expectations of a rate cut to November./USD has been rising since April and has continued to do so after breaking above the longer-term trendline resistance.
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