The consumer price index indicated that U.S. inflation was slowing down earlier than anticipated on Tuesday, which helped the dollar rebound from its biggest decline in a year. This confirmed to the market that the Federal Reserve had finished raising interest rates.On the other hand, inflation is still significantly higher than the Fed's target rate …
The consumer price index indicated that U.S. inflation was slowing down earlier than anticipated on Tuesday, which helped the dollar rebound from its biggest decline in a year. This confirmed to the market that the Federal Reserve had finished raising interest rates.
On the other hand, inflation is still significantly higher than the Fed’s target rate of 2%, with an annualized rate of nearly 3%. This raises questions about when the Fed would begin cutting interest rates.
Still, according to the Census Bureau of the Commerce Department, U.S. retail sales decreased in October for the first time in seven months. Furthermore, the Bureau of Labor Statistics of the Department of Labor revealed last month that producer prices had declined at the greatest rate in three and a half years.
Around 80% of the decrease in the Producer Price Index for final demand items that occurred last month, according to the Bureau of Labor Statistics, was caused by a 15% decrease in gas prices.
A rate decrease in May 2024 is now more likely than ever, with the CME Group’s FedWatch Tool showing that investors have essentially discounted the possibility of another rate hike at the December meeting of Fed policymakers.
The preceding two years have seen the dollar’s performance in the latter quarter be lackluster. According to Brad Bechtel, global head of FX at Jefferies in New York, it peaked in the third quarter of both 2021 and 2022 and experienced a reduction through January each year.
Previous British sources indicated that last month’s inflation decreased to 4.6%, which was the lowest level in two years. The Bank of England had to reevaluate its policy stance in response to this statistic, which was lower than anticipated at 4.8% and had a negative impact on the currency.
Risk Disclaimer
Please note that this article does not offer any instructions or suggestions regarding investment decisions. Therefore, it is essential that you carefully evaluate your financial situation and conduct thorough analysis, or seek advice from a qualified professional, before making any investment decisions.
