The U.S. Dollar is trading in weaker ranges to start this morning and close off May following a week characterized by commentary suggesting U.S. monetary policy is going to remain as is.
Overview
Although this year was supposed to demonstrate a slowdown for the U.S. economy accompanied by stimulus-driven interest rate cuts, the evidence is not showing anything to Fed officials as a special need to pivot towards a more “dovish” plan. Along with the Fed’s preferred gauge of inflation in Personal Consumption Expenditures, April data points came in mostly as expected. Real Personal Spending came in with a surprise contraction of (0.1%) when a 0.1% expansion was estimated. PCE Deflator year over year remains at 2.7%.
At the time of writing, headlines highlighted how the data is convincing markets some cuts may still be on the table for 2024. The Buck, meanwhile, is losing ground primarily to Major peers, averaging over half a percent decline thus far. For May, the Buck has slipped by over 1.0%, per the Bloomberg Dollar Spot Index. MSCI Emerging Markets Currency Index is showing a week of collapse for EM tender, but overall, for the month, they have seen a value uptick of over half a percent. We will count on plenty of indicators next week, primarily measuring production and producers’ orders.
What to Watch Today…
- Monex USA Online is always open.
EUR ⇑
The Euro is climbing and has earned 1.1% of value thus far for May based on steady data and hopes the Euro-zone will be growing remainder of the year. Today, May Consumer Price Index (CPI) came in a bit higher than expected making the yearly average at 2.6% versus 2.5%. Next week, we will get word from the European Central Bank as they are readying themselves for a rate cut on June 6th. We shall see if current levels will hold for the shared currency.
MXN ⇓
The Mexican Peso has swung dramatically throughout May, making it so that the move for the month is almost a muted change from where it began. After reaching the strongest level in 8 years over the Buck, the Peso has been on a fall ahead of key elections happening in Mexico this Sunday. If you have not, please read our take on the volatility this event represents and how it could move the needle either way depending on the smoothness and tranquility to derive next week.
