Tag: Inflation

  • USD/CHF wobbles near six-week low around 0.8200, US NFP in focus

    USD/CHF wobbles near six-week low around 0.8200, US NFP in focus


    • USD/CHF trades cautiously around 0.8200, while investors await key US NFP data for May.
    • Disappointing US ADP Employment and ISM Services PMI data for May have battered the US Dollar.
    • The Swiss CPI deflated by 0.1% in May, paving the way for more interest rate cuts from the SNB.

    The USD/CHF pair trades with caution near the six-week low around 0.8200 during late Asian trading hours on Thursday. Investors brace for significant volatility in the pair as the United States (US) Nonfarm Payrolls (NFP) data takes centre stage, which will reflect the current status of the labor market.

    The US Dollar (USD) fell sharply on Wednesday after the release of a string of disappointing US economic data for May, notably a sharp slowdown in the private sector labor demand. The ADP Employment Change data showed that the private sector added 37K fresh workers, the lowest reading seen since the Covid era in February 2021.

    Additionally, weak Services PMI and rising input costs in the services sector, which accounts for the two-third of the overall economic activity, have prompted stagflation risks. According to the US ISM Services PMI report, activities in the sector unexpectedly declined, and the sub-component Prices Paid grew at a faster pace. The scenario of rising input costs and labor market slowdown often leads to stagflation.

    On the trade front, investors seek fresh cues on trade negotiations between Washington and Beijing. On Wednesday, the comments from US President Donald Trump in a post on Truth.Social signaled that trade negotiations with Chinese leader Xi Jinping won’t be easy. “I like President Xi of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” Trump wrote.

    In the Swiss region, the scenario of deflation has raised expectations of an interest rate cut by the Swiss National Bank (SNB) in the monetary policy meeting on June 19. On Tuesday, the data showed that the Swiss Consumer Price Index (CPI) deflated by 0.1% on year, as expected, in May after remaining flat in April.

    SNB President Martin Schlegel already warned in an event in Basel in the last week of May that Swiss inflation could enter negative territory, Reuters reported. However, he ruled out expectations that short-term inflation hiccups could lead to monetary policy adjustments, stating that the central bank is more focused on maintaining price stability in the medium term.

    “Even negative inflation figures cannot be ruled out in the coming months,” Schlegel said and added, “The SNB does not necessarily have to react to this.”

     

    US Dollar FAQs

    The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
    Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

    The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

    In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

    Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.



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  • The US economy remains resilient

    The US economy remains resilient


    The President of the Federal Reserve (Fed) Bank of Dallas, Lorie Logan, struck a cautiously balanced tone in earlier remarks, acknowledging both persistent inflation pressures and rising market uncertainty.

    Key Quotes

    • Despite uncertainty and financial market volatility, the US economy is resilient.
    • The labour market remains stable.
    • Inflation is still somewhat above target.
    • Risks are balanced on both sides of the mandate.
    • If tariffs change inflation expectations, that would be significant.
    • Market volatility and uncertainty could cause households and businesses to pull back.
    • Monetary policy is well positioned to wait and be patient.
    • Well-positioned to act if risks materialise.
    • Key risk is if higher short-term inflation expectations become entrenched.
    • Our job is to ensure inflation doesn’t become persistent.



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  • Core PCE inflation softens to 2.5% in April as forecast

    Core PCE inflation softens to 2.5% in April as forecast


    Annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, declined to 2.1% in April from 2.3% in March, the US Bureau of Economic Analysis reported on Friday. This reading came in below the market expectation of 2.2%.

    The core PCE Price Index, which excludes volatile food and energy prices, rose 2.5% in the same period, down from the 2.7% increase reported in March and in line with analysts’ estimates. The PCE Price Index and the core PCE Price Index both rose 0.1% on a monthly basis.

    Other details of the report showed that Personal Income and Personal Spending grew 0.8% and 0.2%, respectively, on a monthly basis in April.

    Market reaction to US PCE inflation data

    The US Dollar Index showed no immediate reaction to these figures and was last seen rising 0.1% on the day at 99.44.

    US Dollar PRICE Today

    The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.23% 0.04% -0.32% -0.06% 0.37% 0.01% -0.05%
    EUR -0.23% -0.17% -0.59% -0.28% 0.19% 0.11% -0.27%
    GBP -0.04% 0.17% -0.39% -0.10% 0.37% 0.11% -0.09%
    JPY 0.32% 0.59% 0.39% 0.27% 0.79% 0.49% 0.34%
    CAD 0.06% 0.28% 0.10% -0.27% 0.52% 0.20% 0.01%
    AUD -0.37% -0.19% -0.37% -0.79% -0.52% -0.06% -0.46%
    NZD -0.01% -0.11% -0.11% -0.49% -0.20% 0.06% -0.38%
    CHF 0.05% 0.27% 0.09% -0.34% -0.01% 0.46% 0.38%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    This section below was published as a preview of the US Personal Consumption Expenditures (PCE) Price Index data for April at 06:00 GMT.

    • The core Personal Consumption Expenditures Price Index is expected to rise 0.1% MoM and 2.5% YoY in April.
    • Markets expect the Federal Reserve to hold the policy setting unchanged in June.
    • Annual PCE inflation is forecast to edge lower to 2.2%.

    The United States (US) Bureau of Economic Analysis (BEA) is set to release the Personal Consumption Expenditures (PCE) Price Index data for April on Friday at 12:30 GMT. This index is the Federal Reserve’s (Fed) preferred measure of inflation.

    The core PCE Price Index, which excludes volatile food and energy prices, is projected to rise 0.1% on a monthly basis in April, after remaining unchanged in March. Over the last twelve months, the core PCE inflation is forecast to edge lower to 2.5% from 2.6%. Meanwhile, the headline annual PCE inflation is seen retreating to 2.2% from 2.3% in this period. 

    Anticipating the PCE: Insights into the Fed’s key inflation metric

    PCE inflation data is usually seen as a big market mover because it is taken into account by Fed officials when deciding on the next policy move. During the press conference following the May meeting, Fed Chairman Jerome Powell noted that inflation remains above their target and added that they expect upward pressure to persist. Citing “a great deal of uncertainty about tariffs,” Powell argued that the right thing for them to do is to await further clarity before taking the next policy step. 

    Previewing the PCE inflation report, TD Securities said: “We look for core PCE prices to remain subdued in April, rising 0.1% m/m after printing flat in March—though last month’s data will be revised higher. Headline PCE inflation should also come in soft at 0.06%. On a y/y basis, we look for core PCE inflation to rise 2.6%. We also expect personal spending to mean-revert after front-loading led to a 0.7% m/m surge in March.”

    New York Fed President John Williams said earlier in the week that he wants to avoid inflation becoming highly persistent because that could become permanent. Meanwhile, Minneapolis Fed President Neel Kashkari noted that he supports maintaining interest rates until there is some more clarity on the impact of higher tariffs on inflation.

    How will the Personal Consumption Expenditures Price Index affect EUR/USD?

    Market participants are likely to react to an unexpected reading in the monthly core PCE Price Index, which is not distorted by base effects. A print of 0.3% or higher MoM could support the US Dollar (USD) with an immediate reaction. On the other hand, a reading of 0% or a negative print could have the opposite effect on the USD’s performance against its major rivals.

    According to the CME FedWatch Tool, markets currently see virtually no chance of a Fed rate cut in June, while pricing in about a 25% probability of a cut in July. Hence, the market positioning suggests that the USD has some room left on the upside if the monthly core PCE reading surprises to the upside. Conversely, investors could reassess the probability of a rate reduction in July if a soft PCE figure eases concerns that inflation remains sticky. 

    Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief technical outlook for EUR/USD:

    “The Relative Strength Index (RSI) indicator on the daily chart holds slightly above 50, and EUR/USD fluctuates above the 20-day Simple Moving Average (SMA), reflecting a lack of seller interest. On the downside, 1.1200 (Fibonacci 23.6% retracement of the January-April uptrend, lower limit of the ascending regression channel) aligns as first support before 1.1015-1.1000 (Fibonacci 38.2% retracement, round level).”

    “Looking north, resistance levels could be spotted at 1.1400 (static level), 1.1500 (static level, round level) and 1.1575 (April 21 high).”

    Inflation FAQs

    Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

    The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

    Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

    Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
    Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.



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  • EUR/USD edges lower to mid-1.1300s; looks to US PCE Price Index for fresh impetus

    EUR/USD edges lower to mid-1.1300s; looks to US PCE Price Index for fresh impetus


    • EUR/USD ticks lower on Thursday and stalls the previous day’s bounce from over a one-week low.
    • A turnaround in the global risk sentiment lends some support to the USD and weighs on the pair.
    • Traders now look to the US PCE Price Index for some impetus ahead of the ECB next Thursday.

    The EUR/USD pair struggles to capitalize on the previous day’s solid bounce from the 1.1200 neighborhood, or a one-and-a-half week low, and trades with a mild negative bias during the Asian session on Friday. Spot prices currently hover around the mid-1.1300s, down nearly 0.15% for the day, though the downside remains cushioned.

    Following the previous day’s dramatic turnaround, the US Dollar (USD) attracts some dip-buyers amid the flight to safety and turns out to be a key factor acting as a headwind for the EUR/USD pair. A federal appeals court paused a separate trade court ruling and reinstated US President Donald Trump’s sweeping trade tariffs late Thursday. This adds a layer of uncertainty in the markets and revives demand for traditional safe-haven assets.

    The USD uptick, however, lacks bullish conviction amid concerns about the worsening US fiscal condition and expectations that the Federal Reserve (Fed) will lower borrowing costs again in 2025. The shared currency, on the other hand, continues to draw some support from US President Donald Trump’s decision to delay the imposition of tariffs on the European Union (EU), which contributes to limiting the downside for the EUR/USD pair.

    Moving ahead, the spotlight turns to the release of the US Personal Consumption Expenditure (PCE) Price Index. The crucial data will play a key role in influencing expectations about the Fed’s rate-cut path, which, in turn, will drive the USD demand and provide some impetus to the EUR/USD pair heading into the weekend. The market focus will then shift to the crucial European Central Bank (ECB) monetary policy meeting next Thursday.

    Euro FAQs

    The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
    EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

    The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
    The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
    The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

    Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
    Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

    Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
    A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
    Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

    Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
    If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.



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  • Inflation dynamics may cause considerable challenges

    Inflation dynamics may cause considerable challenges


    European Central Bank (ECB) Governing Council member and head of the Dutch central bank De Nederlandsche Bank (DNB) Klass Knot noted on Wednesday that the current outlook on European inflation is murky, making it difficult for the ECB to engage in direct moves.

    Key highlights

    Medium-term inflation outlook is more ambiguous.

    Near-term growth and inflation risks are to the downside.

    Monetary-policy stance should be neutral.

    Inflation dynamics may cause considerable challenges.



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  • Core PCE inflation softens to 2.5% in April as forecast

    UK inflation jumps to 3.5% YoY in April vs. 3.3% forecast


    • The United Kingdom’s annual CPI rose % in April vs. 3.3% forecast.
    • British inflation jumped to 1.2% MoM in April vs. a 1.1% anticipated.
    • GBP/USD regains 1.3450 after UK CPI inflation data.

    The United Kingdom (UK) annual headline Consumer Price Index (CPI) jumped by 3.5% in April after recording a 2.6% growth in March, the data released by the Office for National Statistics (ONS) showed on Wednesday. 

    The market forecast was for a 3.3% acceleration in the reported period. The reading moves further away from the Bank of England’s (BoE) 2% target.

    The core CPI (excluding volatile food and energy items) rose 3.8% year-over-year (YoY) in the same period, as against a 3.4% increase in March, beating the expected print of 3.6%.

    Services inflation firmed up to 5.4% YoY in April from March’s 4.7%.

    Meanwhile, the monthly UK CPI inflation jumped to 1.2% in April from 0.3% in March. Markets predicted a 1.1% reading.

    GBP/USD reaction to the UK CPI inflation data

    The UK CPI data provides a fresh boost to the Pound Sterling, driving GBP/USD briefly above 1.3450 before reversing to near 1.3432, where it now wavers. The pair is still up 0.32% on the day.

    British Pound PRICE Today

    The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.36% -0.26% -0.55% -0.18% -0.35% -0.32% -0.63%
    EUR 0.36% 0.10% -0.21% 0.16% 0.03% 0.04% -0.28%
    GBP 0.26% -0.10% -0.27% 0.09% -0.05% -0.05% -0.39%
    JPY 0.55% 0.21% 0.27% 0.34% 0.19% 0.21% -0.10%
    CAD 0.18% -0.16% -0.09% -0.34% -0.17% -0.13% -0.47%
    AUD 0.35% -0.03% 0.05% -0.19% 0.17% 0.02% -0.30%
    NZD 0.32% -0.04% 0.05% -0.21% 0.13% -0.02% -0.33%
    CHF 0.63% 0.28% 0.39% 0.10% 0.47% 0.30% 0.33%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

    This section below was published at 02:15 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.

    • The United Kingdom’s Office for National Statistics will publish the April CPI data on Wednesday.
    • Inflation, as measured by the CPI, is forecast to be much higher than in March.
    • The GBP/USD pair trades near its 2025 high and aims to advance beyond it.

    The United Kingdom (UK) will release the Consumer Price Index (CPI) data for April on Wednesday at 06:00 GMT. The report, released by the Office for National Statistics (ONS), has a relevant impact on the Sterling Pound (GBP) amid its potential effect on future Bank of England (BoE) monetary policy decisions.

    Inflation, as measured by the CPI, is foreseen to have risen by 1.1% on a monthly basis, much higher than the 0.3% posted in March. The annual figure is expected to be 3.3%, also higher than the previous 2.6%. Finally, the annual core CPI is forecast to hit 3.7% after posting 3.4% in the previous month.

    What to expect from the next UK inflation report?

    The UK CPI is then seen almost doubling the BoE’s goal of 2%. The news, while discouraging, would come as no surprise.

    The BoE’s last decision on monetary policy was to cut the benchmark interest rate to 4.25% from 4.5%, with five out of the nine Monetary Policy Committee (MPC) members backing such a decision. Two other voting members aimed for a larger cut, while the other two preferred to keep rates on hold.

    In the accompanying statement, policymakers noted, “There is also a lot of uncertainty from global developments, partly because of changes in global trade policies. We are assessing what this could mean for UK inflation closely.” Officials also added: “We expect an increase in inflation this year. It is likely to rise temporarily, to 3.7%, partly because of higher energy prices. Inflation is expected to fall back to the 2% target after that.”

    Uncertainty has dominated central banks’ messages since United States (US) President Donald Trump arrived in the White House with his protectionist policies. Massive tariffs pose a risk to global growth and inflation. While the UK is among the economies less affected by Trump’s decision, it is indeed not exempt from suffering an economic setback due to levies.

    Markets are cautiously optimistic amid a 90-day pause in levies and a reduction of retaliatory tariffs between Washington and Beijing. Still, it is worth noting tensions remain in the background, with trade negotiations underway without progress being reported.

    Deutsche Bank senior economist Sanjay Raja adds: “April inflation will present the biggest test for the Monetary Policy Committee so far this year”.

    How will the UK Consumer Price Index report affect GBP/USD?

    The inflation uptick falls within the BoE’s predictions, but that does not make it less worrisome. Generally speaking, higher than anticipated CPI figures would suggest the BoE will adopt a more hawkish stance and refrain from trimming interest rates, resulting in a firmer GBP. The opposite scenario is also valid, with softer-than-anticipated inflationary pressures leaving the door open for additional rate reductions.

    Ahead of the announcement, the GBP/USD pair comfortably trades above the 1.3300 mark, roughly 100 pips away from the 2025 peak at 1.3445 amid broad US Dollar weakness. The Greenback came under selling pressure after Moody’s Investors Service, a rating agency, downgraded the United States sovereign credit rating from Aaa to Aa1 on Friday, expressing concerns about piling up debt.

    Valeria Bednarik, Chief Analyst at FXStreet, expects GBP/USD to reach higher highs for the year in the upcoming days. “Given the broad USD weakness and increasing price pressures in the UK, the GBP/USD pair is likely to resume its advance and challenge the yearly peak.”

    Bednarik adds: “From a technical point of view, GBP/USD is in a consolidative stage since mid-April. The daily chart shows that moving averages have turned flat, reflecting the lack of directional strength, yet the pair holds above them all, with the 20 Simple Moving Average (SMA) providing support at around the 1.3300 mark. Below such level, buyers have been defending the downside at around the 1.3250 region, while the base of the monthly range comes at 1.3140.”

    Finally, Bednarik states: “A steady advance beyond the 1.3400 mark should favor a run past the year high and towards the 1.3500 area, while additional gains expose the 1.3560 price zone, where GBP/USD peaked in September 2022.”

    Inflation FAQs

    Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

    The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

    Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

    Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
    Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.



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  • Fed policy is well-positioned, but tariffs could impact inflation

    Fed policy is well-positioned, but tariffs could impact inflation


    Federal Reserve (Fed) Bank of St Louis President Alberto Musalem added his voice to the chorus of Fedspeakers warning that US trade policy under the guidance of the Trump administration is poised to not only weigh on growth, but could also exacerbate price volatility, one of the Fed’s favorite stand-in phrases for inflation.

    Key highlights

    Monetary policy currently well-positioned.

    A balanced response to higher inflation and unemployment is feasible if inflation expectations stay anchored.

    If inflation expectations become de-anchored, Fed policy should prioritize price stability.

    US economy has underlying strength, labor market stable, inflation has eased but above 2% goal.

    Economic policy uncertainty is unusually high.

    Even after May 12th de-escalation, tariffs likely to lead to labor market softening and higher prices.

    Tariffs as likely to have temporary as persistent effect on inflation.

    If trade tensions are durably de-escalated, inflation could head back to target, labor market remain resilient, and current monetary policy would remain appropriate.

    Long-term inflation expectations remain anchored.

    Hearing businesses and households are holding back from decisions amid uncertainty.

    If decisions have been somewhat paused, I’d expect it to affect the economic outlook.

    Impact of uncertainty on economic activity tends to be pretty meaningful.

    The labor force has continued to grow even with decrease in immigration.

    I hear there is some scarcity of some types of workers in some industries.



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  • China Producer Price Index (YoY) below forecasts (-2.6%) in April: Actual (-2.7%)



    China Producer Price Index (YoY) below forecasts (-2.6%) in April: Actual (-2.7%)



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  • Mindful of impact of the rising food prices on underlying inflation

    Mindful of impact of the rising food prices on underlying inflation


    Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday, he is “mindful of the impact of the rising food prices on underlying inflation.”

    Additional quotes

    • Uncertainties over rice and other food prices remain high, but prices likely to settle down eventually.
    • Will closely monitor price situations closely as uncertainties over global economy remain high.

    Market reaction

    These comments fail to move the needle around the Japanese Yen (JPY) as USD/JPY trades modestly flat on the day near 143.75, as of writing.

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.



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  • Germany Brandenburg CPI (YoY) rose from previous 2.3% to 2.4% in April




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  • Japan Nationwide Inflation Climbs 3.6% On Year In March

    Japan Nationwide Inflation Climbs 3.6% On Year In March


    Overall consumer prices in Japan were up 3.6 percent on year in March, the Ministry of Internal Affairs and Communications said on Friday.

    That was in line with expectations and down from 3.7 percent in February.

    On a monthly basis, inflation rose 0.3 percent after slipping 0.4 percent in the previous month.

    Core CPI was up 3.2 percent on year – matching forecasts and up from 3.0 percent a month earlier.

    For comments and feedback contact: editorial@rttnews.com

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    What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.





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  • Japanese CPI data will take centre stage on Good Friday

    Japanese CPI data will take centre stage on Good Friday


    The Greenback grabbed some much-needed oxygen on Maundy Thursday despite alternating risk appetite trends. In addition, investors shifted their attention to another round of the Trump-Powell effervescence after Trump urged the Fed to slash interest rates and said Chair Powell should be removed as soon as possible, repeating past threats to fire him. The comments came a day after Powell emphasised the Fed’s independence in a speech.

    Here is what you need to know on Friday, April 18:

    The US Dollar Index (DXY) posted decent gains on Thursday, although it maintained its business in the lower end of the recent range near three-year lows. The Fed’s Daly is due to speak amid the widespread inactivity in the global markets on Good Friday.

    Unlike its risk-linked peers, EUR/USD traded with noticeable losses despite briefly surpassing the 1.1400 barrier earlier in the day. The European Commission (EC) will publish its preliminary Consumer Confidence gauge on April 22.

    GBP/USD kept its march north well and sound for yet another day, although gains appeared capped by the vicinity of 1.3270. Public Sector Net Borrowing figures will be next on the UK calendar on April 22.

    After bottoming out around 141.60, USD/JPY managed to regain balance and advance past the 142.00 hurdle, up modestly for the day. The Japanese Inflation Rate will be the only release on the docket.

    AUD/USD ended the day with modest gains around the 0.6380-0.6390 band, clinching its seventh daily advance in a row. The flash S&P Global Manufacturing and Services PMIs are due on April 23.

    Fresh sanctions on Iranian crude oil exports and renewed supply concerns motivated prices of WTI to climb just above the $64.00 mark per barrel, reaching new two-week highs.

    Prices of Gold came under fresh selling pressure on Thursday, slipping back below the $3,300 mark per troy ounce on the back of a better tone in the risk-related assets. Silver prices followed suit and flirted with three-day troughs near the $32.00 mark per ounce.



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  • Canadian Dollar struggles near 1.40 amid soft inflation and trade uncertainty

    Canadian Dollar struggles near 1.40 amid soft inflation and trade uncertainty


    • USD/CAD trades near the 1.4000 area after bouncing from mid-1.38s earlier this week.
    • Softer Canadian inflation and Powell’s tariff warnings pressure the Canadian Dollar outlook.
    • Key resistance stands at 1.4060; technical backdrop skews bearish despite recent rebound.

    USD/CAD hovered near the 1.4000 zone on Tuesday, consolidating after recovering from earlier lows around the 1.3850 region. The Canadian Dollar failed to gain traction despite a cooler-than-expected inflation report for March, while traders brace for the Bank of Canada’s policy decision. Meanwhile, the US Dollar attempted a mild rebound after days of losses tied to ongoing trade tensions with China.

    Canada’s inflation rate slowed to 2.3% annually in March, below expectations and down from 2.6% previously. Month-over-month, CPI rose just 0.3%, missing the 0.7% forecast. The data has slightly softened market expectations that the BoC will hold rates steady at 2.75% in its first policy meeting since June. Markets will closely watch Governor Macklem’s tone, especially as uncertainty rises over how Trump’s aggressive tariff policy may ripple into Canada’s economic outlook.

    On the US side, the Greenback faces persistent pressure from global investors as Trump’s tariff escalation continues to undermine confidence. According to Commerzbank analysts, the complexity and unpredictability of current US trade policy are raising inflation risks while damaging trust among global trading partners. Fed Chair Powell echoed these concerns, warning that the inflationary effects of tariffs could be stronger and more prolonged than initially expected. He added that it’s too early to determine the right path for interest rates and that the Fed is in no rush to act.

    Technically, USD/CAD shows bearish signals overall, even with a modest gain on the day. The pair trades near the top of its daily range between 1.3850 and 1.3980. The Relative Strength Index sits near 37 in neutral territory, while the MACD prints a sell signal. Despite some mixed signals from momentum indicators, moving averages reinforce the downside outlook: the 20-, 100-, and 200-day SMAs, along with the 10-day EMA, all suggest further weakness ahead. Support rests at 1.3827, while resistance levels are located at 1.4002, 1.4060, and 1.4063.

    USD/CAD technical analysis



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  • Focus remains on US inflation, this time with Producer Prices

    Focus remains on US inflation, this time with Producer Prices


    The Greenback plummeted to fresh lows amid persistent concerns over the US-China trade war and its potential impact on both the global and US economies.

    Here is what you need to know on Friday, April 11:

    The US Dollar Index (DXY) tumbled to new multi-month lows in the sub-101.00 region amid shrinking US yields across the curve. Producer Prices will be released, seconded by the advanced Michigan Consumer Sentiment and speeches by the Fed’s Musalem and Williams.

    EUR/USD advanced to new highs after breaking above the key 1.1200 round level. The final Inflation Rate in Germany and the Current Account prints are next on tap.

    GBP/USD added to the weekly recovery and came closer to the 1.3000 milestone. The GDP figures, Goods Trade Balance results, Industrial and Manufacturing Production, Construction Output, and the NIESR Monthly GDP Tracker are all due across the Channel.

    USD/JPY retreated markedly and revisited the area of recent troughs around the 144.00 neighbourhood. Capacity Utilization and the final Industrial Production readings will be published on April 14 in Japan.

    AUD/USD climbed to four-day highs after reclaiming the 0.6200 hurdle on the back of the US Dollar’s sell-off. Next of note in Oz will be the release of the RBA Minutes on April 15.

    Prices of WTI partially left behind Wednesday’s strong rebound and resumed its downtrend, slipping back to levels below the $59.00 mark per barrel on intense tariff concerns.

    Prices of Gold surged to an all-time high near the $3,180 mark per troy ounce on the back of the steep drop in the greenback, trade war jitters and declining US yields. Silver prices rose further and reached four-day tops near $31.30 per ounce, surpassing at the same time their key 200-day SMA.



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  • Japanese Yen strengthens in reaction to stronger PPI print from Japan

    Japanese Yen strengthens in reaction to stronger PPI print from Japan


    • The Japanese Yen attracts fresh buyers as stronger PPI reaffirms BoJ rate hike bets.
    • Hopes for a US-Japan trade deal turn out to be another factor benefiting the JPY.
    • A solid recovery in the global risk sentiment could cap gains for the safe-haven JPY.

    The Japanese Yen (JPY) regained positive traction during the Asian session on Thursday in reaction to the stronger-than-expected release of the Producer Price Index (PPI), which keeps the door open for further rate hikes by the Bank of Japan (BoJ). Adding to this, the optimism that Japan might strike a trade deal with the US turns out to be another factor underpinning the JPY. This, along with a modest US Dollar (USD) downtick, drags the USD/JPY pair back below the 147.00 round-figure in the last hour.

    Meanwhile, hawkish BoJ expectations mark a big divergence in comparison to rising bets for multiple interest rate cuts by the Federal Reserve (Fed) in 2025. This, in turn, fails to assist the USD to capitalize on the overnight bounce from the weekly low and contributes to driving flows toward the lower-yielding JPY. However, a positive turnaround in the global risk sentiment, fueled by US President Donald Trump’s announcement to pause reciprocal tariffs on most nations, might cap the safe-haven JPY.

    Japanese Yen draws support from hawkish BoJ expectations; lacks follow-through amid a turnaround in the risk sentiment

    The Bank of Japan’s preliminary report released earlier this Thursday showed that Japan’s Producer Price Index (PPI) increased by 0.4% in March and rose 4.2% compared to the same time period last year. The readings were higher than consensus estimates and could push up consumer prices, which, in turn, backs the case for further policy tightening by the BoJ and underpins the Japanese Yen.

    US President Donald Trump agreed to meet Japanese officials to initiate trade discussions after speaking to Japan’s Prime Minister Shigeru Ishiba earlier this week. US Treasury Secretary Scott Bessent’s subsequent comments, saying that Japan may be a priority in tariff negotiations, fueled hopes for a possible US-Japan trade deal and turned out to be another factor that underpins the JPY.

    The US Dollar rebounded against safe-haven currencies, including the JPY, on Wednesday after Trump declared an immediate 90-day pause on the big tariff increases for most countries. The announcement eased worries about the global economic impact of US trade policies, triggering a sharp rally in equity markets. The S&P 500 soared 9.5% and registered its biggest daily gain since 2008.

    Meanwhile, the minutes of the March 18-19 FOMC meeting revealed that officials almost unanimously agreed that the US economy was at risk of experiencing higher inflation and slower growth on the back of Trump’s trade tariffs. Policymakers, however, called for a cautious approach to interest rate cuts, forcing investors to trim their bets for more aggressive easing by the Fed.

    Traders now expect the Fed to wait until June to resume its rate-cutting cycle and are pricing in just 75 basis points of rate reductions by the year-end. The USD bulls, however, seem reluctant and opt to wait for the release of the US inflation figures – the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively – before positioning for further gains.

    USD/JPY seems vulnerable to sliding further; repeated failures to find acceptance above 148.00 favor bearish traders

    From a technical perspective, the USD/JPY pair has been struggling to find acceptance above the 148.00 round figure since the beginning of this week. Moreover, oscillators on the daily chart are holding in negative territory and are still away from being in the oversold zone. This, in turn, favors bearish traders and suggests that the path of least resistance for spot prices remains to the downside. Hence, a subsequent slide towards the 146.30 intermediate support, en route to the 146.00 mark, looks like a distinct possibility. Some follow-through selling would expose the next relevant support near the 145.50 region before the pair eventually drops to the 145.00 psychological mark.

    On the flip side, the 147.75 zone, followed by the 148.00 mark, could act as an immediate hurdle ahead of the 148.25-148.30 region, or the weekly high touched on Wednesday. A sustained strength beyond the latter would set the stage for an extension of the previous day’s goodish rebound from sub-144.00 levels, or the lowest since October 2024, and allow the USD/JPY pair to reclaim the 149.00 round figure. The momentum could extend further towards the 149.35-149.40 area en route to the 150.00 psychological mark.

    Economic Indicator

    Producer Price Index (YoY)

    The Producer Price Index released by the Bank of Japan is a measure of prices for goods purchased by domestic corporates in Japan. The PPI is correlated with the CPI (Consumer Price Index) and is a way to measure changes in manufacturing cost and inflation in Japan. A high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the JPY, while a low reading is seen as negative (or Bearish).


    Read more.

    Last release:
    Wed Apr 09, 2025 23:50

    Frequency:
    Monthly

    Actual:
    4.2%

    Consensus:
    3.9%

    Previous:
    4%

    Source:

    Statistics Bureau of Japan



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  • Forex Today: The release of US CPI grabs all the attention

    Forex Today: The release of US CPI grabs all the attention



    The Greenback reversed its initial loses to three-day lows and ended the session virtually unchanged in response to a late recovery fuelled by President Trump’s announcement of a 90-day delay on reciprocal tariffs.



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  • Japan Nationwide Inflation Climbs 3.6% On Year In March

    Luxembourg Inflation Slows In March


    Luxembourg’s inflation eased in March to its lowest level in three months amid a steep fall in petroleum prices and communication costs, preliminary data from the statistical office showed on Monday.

    The consumer price index rose 1.3 percent year-on-year after a 1.7 percent climb in February. The rate was the lowest since December when inflation was 1.0 percent.

    Communication costs declined 1.7 percent and transport charges fell 0.68 percent. Prices of petroleum products were 2.7 percent lower.

    Prices in hotels cafes and restaurants increased 2.59 percent. Utility costs rose 4.83 percent.

    The CPI fell 0.2 percent from the previous month, the first decline in four months, mainly due to the sharp 3.4 percent fall in prices of petroleum products. In February, prices rose 1.19 percent from the previous month.

    The statistical office said it was highly likely that the next index tranche would be triggered in April, with payment starting in May.

    For comments and feedback contact: editorial@rttnews.com

    Economic News

    What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.





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