US inflation expectations edge higher around early June tops

Anil Panchal FXStreet

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, eases to 2.41% on Thursday, easing from a fortnight high marked on Wednesday.

Even so, the inflation gauge remains near the 10-week high, suggesting firmer price pressure in the world’s largest economy.

It’s worth noting that the latest readings of the Consumer Price Index (CPI) and Producer Price Index (PPI) flashed mixed readings for July.

Hence, the FRED suggests that the market players remain concerned about the pipe inflation heating irrespective of the latest statistics.

This in turn suggests the monetary policy adjustments at the Federal Reserve (Fed) as the majority of the Fed policymakers have already favored tapering in their recent speeches. Federal Reserve Bank of San Francisco President Mary C. Daly, Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin were among them.

As the reflation and tapering fears firm, the US 10-year Treasury yields and the US Dollar Index (DXY) also stay strong and weigh on commodities as well as Antipodeans.

Read: AUD/USD: Bears reclaim controls above 0.7300 on coronavirus, inflation concerns

It should be noted that the Delta covid variant woes do challenge the dialing back of easy money while vaccine optimism backs the policy hawks.

Hence, market players are modestly optimistic but the confusion over Fed’s next moves keeps the greenback on the upper hand.

Looking forward, traders should keep their eyes on the risk catalysts for fresh impulse whereas the US Michigan Consumer Sentiment Index for August, expected to remain unchanged near 81.2, will offer additional clues to watch.

Read: US Michigan Consumer Sentiment August Preview: Payrolls, inflation and the pandemic

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD remains below 1.1850 after US data

EUR/USD struggles to gain traction and trades in a narrow range below 1.1850 on Wednesday. The US Dollar stays resilient against its rivals following the better-than-expected Durable Goods Orders and housing data, limiting the pair's upside ahead of FOMC Minutes.

GBP/USD stays in narrow channel above 1.3550 ahead of FOMC Minutes

GBP/USD holds its ground following Tuesday's slide and moves sideways above 1.3550 midweek. Although the data from the UK confirmed that inflation cooled in January, the positive shift seen in market mood helps the pair keep its footing as investors wait for the Fed to publish the minnutes of the January policy meeting.

Gold regains some shine, retargets $5,000 ahead of FOMC Minutes

Gold gathers fresh upside traction on Wednesday, leaving part of the weakness seen at the beginning of the week and refocusing its attention to the key $5,000 mark per troy ounce, all ahead of the release of the FOMC Minutes and despite the modest uptick in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.