Investors Await US Data, Currency Market Stalls

14 Mar 2024 , 10:04 AM

The world’s largest economy provided additional data on Thursday, which market participants used to gauge the Federal Reserve’s policy path. The result was a calm currency market, with the US dollar accumulating against its key rivals.

With the U.S. consumer price index (CPI) reporting hotter than anticipated on Tuesday, traders are reevaluating whether the Fed would begin reducing interest rates at its June meeting as originally anticipated, raising concerns that inflation may stay sticky.

According to LSEG’s rate likelihood tool, market participants still anticipate a 65% possibility of a rate drop in June, albeit that number has slightly decreased from 71% earlier in the week. There is about an 83% chance of a rate cut in July.

The Fed’s new economic estimates will be of interest, as it is largely anticipated that it will maintain its current rate of growth at its meeting next week.

At 102.77, the dollar index—which compares the value of the US dollar to a basket of six other currencies—was essentially unchanged.

The producer pricing index (PPI) report, jobless claims, and U.S. retail sales data, which are all expected later on Thursday, will all be closely watched by markets for additional signs of a weakening economy.

The US Federal Reserve is “not far” from having the confidence to start relaxing, according to remarks made by Fed Chair Jerome Powell last week.

The dollar held its value against the yen at 147.69 yen, since it remains quite likely that the Bank of Japan would exit negative rates during its monetary policy meeting on March 18–19.

The first indications of the spring salary discussions are expected on Friday, and a number of the nation’s largest corporations have already promised to fully comply with union demands for wage hikes.

In other news, ahead of statements made by a number of European Central Bank officials on Thursday, the euro was remaining stable against the dollar at $1.0949.

At $1.2796, sterling was unchanged. The British economy resumed growth in January, according to data released on Wednesday, following a brief recession in the latter part of 2023.

In terms of cryptocurrency, bitcoin recently saw a 0.28% decrease to $72,950.00 following a record high of $73,678 the day before.

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