US Dollar picks up where it left off after Fed meeting

LONDON (June 13) The US Dollar (USD) trades overall in the green against most peers on Thursday, making the US Dollar Index (DXY) trade in the green near 105.00. The devaluation of the Greenback seen on Wednesday after the disinflationary Consumer Price Index (CPI) numbers got partially erased by the US Federal Reserve (Fed) rate decision and its dot plot. Federal Open Market Committee (FOMC) members only see reason for one rate cut in 2024, and four in 2025, while markets were expecting two rate cuts for this year. 

Fed Chairman Powell left markets rather clueless as he didn’t commit to any path for interest rates.. This means markets are likely to respond to upcoming data, and with the Producer Price Index (PPI) numbers on the docket, together with the weekly Jobless Claims, any soft number will be enough to trigger US Dollar easing. Similarly, upbeat economic data points will move the needle in favour of a stronger Greenback, making it a bumpy ride until that possible first interest-rate cut in September. 

Daily digest market movers: Devil in the detail

• At 12:30 GMT, the weekly Jobless Claims and the Producer Price Index numbers will be released:
  • Weekly jobless claims for the last week of May:
    • Initial claims are expected to subside a little to 225,000 from 229,000.
    • Continuing Jobless Claims should pick up to 1.800 million from 1.792 million. 
  • May’s Producer Price Index numbers:
    • Monthly headline PPI is seen advancing by a marginal 0.1%, easing from the 0.5% increase seen in April. On year, headline PPI is seen rising to 2.5% from 2.2% .
    • Monthly core PPI should ease as well to 0.3% from 0.5%. Yearly core PPI should remain stable at 2.4%.
• Federal Reserve Bank of New York President John Williams will be the first Fed speaker to come out of the blackout period that takes place during a Fed rate decision. Williams will participate in a moderated discussion at around 16:00 GMT with US Treasury Secretary Janet Yellen at the Economic Club of New York.
• Equities do not like to be left behind clueless by the Fed, with both Asian and European indexes trading in the red. US futures are up though, with a small exception for the Dow Jones Industrial Index. 
• The CME FedWatch Tool shows a 38.5% chance of Fed interest rate at the current level in September. Odds for a 25-basis-points rate cut stand at 56.7%, while a very slim 4.8% chance is priced in for a 50-basis-points rate cut.
• The benchmark 10-year US Treasury Note slides to the lowest level for this month, near 4.31%. 

FXStreet