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Dollar in distress: US inflation miss shakes markets
Manage episode 371688248 series 3413702
The past fortnight has been eventful with high volatility observed in both Emerging Markets (EM) and major currencies. The significant development was a sharp decline in the US Dollar (USD). Indeed, the USD Index reported one of the largest weekly sell-offs since the Global Financial Crisis.
Investors reacted to a less-than-expected set of US inflation figures. The headline inflation dropped to 3% in March 2021, while the core inflation decreased to below 5% in November 2021.
The sell-off in the USD can be attributed to increased market expectations that the Federal Reserve might halt interest rate hikes by this summer. The expectation currently stands at a 25 basis point hike in July, with the date projected for 26/07. However, indications suggest this could be the last hike in the current cycle, with futures showing a 1-in-4 chance by November.
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91 episodes
Manage episode 371688248 series 3413702
The past fortnight has been eventful with high volatility observed in both Emerging Markets (EM) and major currencies. The significant development was a sharp decline in the US Dollar (USD). Indeed, the USD Index reported one of the largest weekly sell-offs since the Global Financial Crisis.
Investors reacted to a less-than-expected set of US inflation figures. The headline inflation dropped to 3% in March 2021, while the core inflation decreased to below 5% in November 2021.
The sell-off in the USD can be attributed to increased market expectations that the Federal Reserve might halt interest rate hikes by this summer. The expectation currently stands at a 25 basis point hike in July, with the date projected for 26/07. However, indications suggest this could be the last hike in the current cycle, with futures showing a 1-in-4 chance by November.
We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk
Liked this show? Please leave us a review here – even one sentence helps!
91 episodes
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