The US dollar (USD) was significantly depreciated yesterday behind the US inflation data weakest than expected. At first glance, this may seem logical. After all, the inflationary pressure contained favors cuts of potentially faster interest rates by the Fed. However, the reaction was anything but trivial. It could also be argued that the risks of stagflation have decreased, which would be positive for the dollar, says Thu Lan Nguyen, head of FX investigation and raw materials of Commerzbank.
The currency market reacts to the USD USD CPI figures
“However, the fact that the currency market has reacted to the weakness of the dollar could also be due to something else: the US president probably feels justified by the result. And this does not mean the prices of eggs -admittedly significantly lower -but above all the lack of a tariff effect on April prices data, which may have surprised some. Inventory, for example, that allows companies to delay price increases.
“On the other hand, however, inflation figures also show that the impact of tariff It has reduced price risks, there is likely that there is an agreement that a 30% tariff on China imports still has a significant inflation effect. “
“This could be even more true since the president of the FED, Jay Powell, is under fire of President Trump. The latter could not resist attacking Powell in his favorite social media channel yesterday after inflation figures. If only to underline the independence of the US Central Bank Inflation has not fallen massively below expectations (0.2% instead of 0.3% compared to the previous month according to the Bloomberg survey).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
