FOREX
The US dollar index, a measure of the greenback’s performance against a basket of other major currencies, touched a 15-month low during early Thursday trading. The dollar’s softness occurs as investors recalibrate expectations over the Federal Reserve’s monetary policy. Yesterday’s CPI numbers surprised to the downside, with the headline number falling to 3% and the Fed’s favourite month-on-month core inflation reading at 0.2%, instead of the expected 0.3%. With inflation slowing down faster than expected, the Fed’s tightening is producing the desired effect, and investors have started to price-in the end of the current hiking cycle, which is now expected to come after this month’s final increase of 25 basis points. The markets can now see a path for a soft landing of the US economy, with inflation being controlled without the country’s economy entering a serious recession. Against this background, investors are pivoting from the haven dollar to riskier assets, such as stocks, creating scope for further greenback depreciation.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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