The U.S. Dollar is trading in tight ranges, not truly benefitting much from post-inflation numbers that indicated an ongoing rise in prices.
Overview
Per Consumer Price Index data, April inflation rose just slightly higher than expected with the month-on-month figure at 0.6% vs. 0.4% expected. The year-on-Year percentage rose to an average of 8.3% instead of 8.1%.
More concerning, wages continued to contract per the Real Average Hourly Earnings coming in at (-2.6%) as prices continue climbing. The reality seems grim at the moment in the midst of a global economy that does not feel anyway near as confident as the Federal Reserve and other central banks. Experts in equity markets foresee struggles for the next 12 months as the globe copes with many negative items.
At the moment of writing, the buck started to lose ground after seeming to initially remain on the stronger side following the CPI release. Expect swings to continue as guidance for the long-term is hard to find. We will see the price situation for suppliers tomorrow in the form of the Producer Price Index.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is currently stronger against the buck from earlier morning rates as the inflationary numbers in the U.S. established that inflationary growth has not gone away. Without any data to chew until next week, it is possible for the Euro to return to gains as it tries to keep away from its weakest point in over two years.
For now, the EU is trying to maintain a consensus over how to address the ban on energy imports as a united front. Russia has been reported to be running into obstacles in concentrating power in East Ukraine. Perhaps any signs of peaceful negotiations or something in the sense of a cease-fire could propel Euro higher.
GBP
Sterling managed to pick up some steam following the CPI release. Tomorrow, there will be Gross Domestic Product numbers to analyze. Meanwhile, Brexit issues are back on the table with the EU ready to suspend its trade agreement with the U.K. if Prime Minister Boris Johnson revokes the Northern Ireland protocol, which has prevented from having a hard border between Ireland and N.I.
We shall see how this development adds to both political pressures and downward risks to economic growth.
