The Wall Street Journal reported that San Francisco Fed President Mary Daly A said Friday she was prepared to support another rate increase of 0.75 percentage point at the central bank’s next meeting, on July 26-27, to counter inflation, which is at a 40-year high.
Several other Fed officials endorsed such a move over the past week.
Daly said that the central bank needs to raise interest rates to levels designed to slow economic growth and combat inflation and that those levels will depend on factors outside of the Fed’s control.
US inflation has accelerated to an 8.6% annual rate in May, its fastest pace in 41 years and is a factor raising the risk of US recession.
Meanwhile, the US dollar has been pressured of late as markets reaccess the Fed's path and the greenback posted its first weekly decline this month.
A significant factor this week has been the fall in oil and commodity prices, which has eased inflation fears leading to a return to risk appetite. This has eroded the safe-haven bid that has been boosting the dollar against major currencies:
We have seen the price action in DXY play out as follows:
A break of structure, BoS, would be expected to lead to a sell-off as illustrated above.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.