Dollar Eases Ahead of CPI Report

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The dollar index eased to around 102.2 on Thursday, sliding for the second straight session as investors braced for key US inflation data that could influence the outlook on Federal Reserve monetary policy. Markets expect the headline inflation to rise to 3.1% in December, while the core inflation rate is anticipated to fall to 3.8%, the lowest since May 2021. Traders see around a 64% chance that the Fed would start easing as soon as March, although that compared with a nearly 90% chance seen a week ago. Some analysts suggested that May was more likely to be the start of the easing cycle as the US labor market remains tight and inflation stays above the central bank’s 2% target. New York Fed President John Williams also said on Wednesday that it’s still too early to call for rate cuts as the central bank still has some way to go getting inflation back to 2%.

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