Daily Market Update

Dollar returns as commentary overshadows data

May 16, 2024

The U.S. Dollar is in a bit of recovery mode after having a rally against overall based on data suggesting inflation has eased.


Following Consumer Price Index figures slowing down the most in six months, it was the Buck that suffered the consequences, falling to its weakest point in five weeks. Throughout overnight sessions, the momentum across the board faded, complemented by commentary that suggested the Fed should hold a more “hawkish” than “dovish” stance.

New York Fed President John Williams explained that while he sees the CPI data calming down, he needs to see more evidence to merit the Fed pivoting towards cutting borrowing costs. Some bankers are also thinking that there will be further inflationary pressures ahead. Data-wise it seems like the economy is demonstrating to be steady yet cooling down a bit. Industrial production for April came out flat, evading the expected 0.1% advance, while both Housing Starts and Building Permits came in lower than their estimates. There was a contraction in the requests for construction. We will likely hear other commentary that could erase the gains some currency pairs had over the dollar.

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The Mexican Peso fell slightly after a return to “hawkish” sentiment on the American side, regardless of inflationary figures showing signs of easing in price growth. LATAM currencies have maintained some of their strength, but data out of Peru and Brazil disappointed, making BRL and PEN lose after gaining throughout May.

Copper prices have improved with the prospects of a slow but gradual global recovery of demand for the heavy material, in turn helping the Chilean Peso maintain a boost of over 6.0% for the month. While LATAM central banks have already made cuts to interest rates, their closeness to American trade and commerce while also attracting foreign attention on their own credit has kept the currencies from plummeting in value. With a less heated economy in the U.S., we shall see if there is room for EM-currencies as a whole to climb as comments from decision-makers rain on the parade.


The Antipodean currencies had advanced yesterday based on American figures, but also because of some positive news out of China in terms of stimulus. While the world’s second-largest economy has struggled to find its footing as a leading source of growth, its latest plan to purchase housing and invest directly to ease the financial housing issues that it has faced pushed “Aussie” and “Kiwi’ to 1.0% jumps. Today, the enthusiasm and appreciation have been halted as AUD fell half a percent following a disappointing rise in unemployment from 3.9% to 4.1%.


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