The U.S. Dollar continues to dominate following a day in which Fed officials made it clear they want to accelerate the pace of tightening to control record-high inflation.
Overview
Although Core Inflation showed signs of weakening, the headline Consumer Price Index figure was the highest since 1981 and it produced even more hawkish sentiment from Fed members St. Louis Fed Governor James Bullard and Fed Vice-Chair Lael Brainard.Today’s Producer Price Index numbers for March revealed the biggest jump on record as it advanced more to a yearly average of 11.2% after a monthly expansion of 1.4% vs 1.1% expected. Indeed, this helps the dollar immensely, at least for now and for the short term. The buck is moving around its best levels overall since July 2020.
What to Watch Today…
- No major economic events scheduled for today
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NZD
The “Kiwi” is down by over 1.0% following what markets considered a “dovish” hike yesterday from the Reserve Bank of New Zealand. Regardless of a 50-basis-points move, the biggest in 22 years, the Antipodean currency depreciated based on the belief that there will not be another move of this kind later.
More importantly, economists are concerned that the irregularity of the global economic recovery has affected the country and the central bank could be hiking rates into a recession. For now, the idea of “stagflation,” high prices/low growth, seems to be hurting currencies against the greenback.
GBP
The Pound is currently the only exception to the buck’s strength as more data continues to give a reason for the Bank of England to maintain its tightening path. CPI grew more than expected and now averages 7.0% year-on-year, the most in three decades.
As these new highs continue to be reached, expect more worry and indications from central bankers that inflation is a major threat. Volatility is high and there is no clarity with all kinds of negative headlines.
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