USD Grinds Higher as FED Maintains Hawkish Rhetoric
Markets have been relatively quiet today, with the USD slowly grinding higher. There has been limited market activity
Markets have been relatively quiet today, with the USD slowly grinding higher. There has been limited market activity and traders awaiting significant events on the economic calendar. The Canadian Consumer Price Index (CPI) report was the main noteworthy release for the day, which sent the CAD around 50 pips lower.
Looking ahead, the release of the Federal Reserve meeting minutes scheduled for tomorrow could serve as a potential catalyst for market action this week. However, there have been numerous FED speakers in the last two days, who have updated us with their views, and they have failed to get markets going.
Alternatively, if no significant developments occur, market participants may experience a subdued price action until Thursday’s Manufacturing and Services Purchasing Managers’ Index (PMI) report. At present, sideways trading appears to be the prevailing trend, particularly in the foreign exchange (FX) market.
The US dollar is exhibiting stability, making minimal gains. EUR/USD is trading within a narrow 30-pip range, reflecting a subdued mood across major pairs in today’s trading session. FED member Waller
FOMC Member Christopher J. Waller Speaking
- Consumer Stress: Wants to see several more months of good inflation data. Waller noted that credit card and auto loan delinquency rates indicate some consumers are experiencing financial stress.
- Monitoring Q2 Performance: He emphasized the importance of closely monitoring private domestic final purchases in the second quarter to gauge economic health.
- Wage Growth: While wage growth is slightly higher than desired, it is not at excessively high levels.
- Monetary Policy: Data on consumer spending and the labor market suggest that current monetary policy is effectively exerting downward pressure on inflation.
- Economic Evolution: The economy appears to be evolving in line with the Fed’s expectations, with no signs of accelerating inflation based on recent data.
- Inflation Target: The April inflation data suggests that progress towards the Fed’s 2% inflation target has likely resumed, although this progress has been modest.
- Policy Rate: Waller indicated that further increases in the policy rate are probably unnecessary unless there is a significant weakening in the labor market.
- Future Easing: He stressed the need for several more months of favorable inflation data before he would feel comfortable supporting a policy easing.
EUR/USD Live Chart
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