Dollar up ahead of US inflation data and Fed rate

10 Haziran 2024

Today’s markets analysis on behalf of George Khoury Global Head of Education and Research at CFI 

The dollar continues to appreciate, with the dollar index climbing above the key level of 105, reaching a four-week high. The US currency is gaining as the market prepares for this week’s Federal Reserve interest rate decision along with key inflation data. Last Friday, the dollar surged, reacting positively to robust US jobs data, which led market participants to review their expectations for a Fed rate cut from September to November.

Additionally, the greenback benefited from a weaker euro amid political uncertainty in Europe. This followed French President Emmanuel Macron’s call for a snap election after his significant defeat to Marine Le Pen’s National Rally party in the EU elections on Sunday.

Looking ahead, the dollar’s recent rebound could be tested by the upcoming release of the US core inflation data for May, scheduled for Wednesday. This release will provide more clarity on inflation trends and could influence expectations for a potential Fed rate cut. Additionally, the Fed meeting on the same day could significantly influence market sentiment and could drive US yields to the upside if the Fed’s stance is more hawkish.

 

ZAID BAREM / YMM