Daily Market Update

Buck attempts comeback as Fed comments sound hawkish

May 17, 2024

The U.S. Dollar is closing the week trying to recover more of its early losses as data fomented a rally against it.


Inflationary as well as Industrial Production gauges came in flat while consumption also looked to have weakened. Nevertheless, what is causing the Buck to resurge is, once again, renewed doubts about the Fed’s willingness to start cutting into interest rates anytime soon. Taking in the commentary from various Fed officials, including Chairman Jerome Powell, it is possible to conclude that the deterioration of certain indicators is not enough yet to pivot towards “dovish” implementation of loose monetary policy.

Today, markets seem to be pricing in just one possible interest rate cut for what is left of 2024. It is also important to note that tensions between the U.S. and China are likely not going to be improving steadfastly following a very warm reception to Russian leader Vladimir Putin, establishing warm ties that the U.S. has recently warned against.

Trade concerns may be once again on the table. One good note is commodities along with oil are trending up in price with news that China will be purchasing unsold homes and relax mortgage rules, thus providing a very direct boost to a stalled economy. Thus far in May, the buck is down by 1.6% per the Bloomberg Dollar Spot Index.

What to Watch Today…

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The Mexican Peso has recovered big time in May, still keeping a 2.0% appreciation over the Buck. While this week was revealing of the U.S.’s disinflation, next week will be packed with Mexico’s indicators measuring consumption starting with Retail Sales on Monday. Various surveys from economists as well as activity will be presented on Tuesday, while Thursday gives us Q1 Gross Domestic Product as well as Bi-weekly CPI.


The Euro is holding on to gains after the release of April’s Consumer Price Index, which came in right as expected. With a monthly uptick of 0.6% and an annual average of 2.7%, it looks like the European Central Bank will not be dealing with any surprises as it readies a path for cutting borrowing costs. Right now, it is highly expected they will begin without any problems in June. Geopolitically, we will monitor some of the diplomatic efforts conducted by France’s President Emmanuel Macron, who has been active in promoting more integration between the EU economies, particularly Germany, as they deter further aggression from Russia and face more regional headwinds.


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