| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 06:45 | France | CPI, m/m | April | 0.2% | 0.5% | 0.5% |
During today's Asian trading, the US dollar declined slightly against major currencies, reaching its lowest level since May 6, while investors are awaiting the publication of US CPI data that will clarify the prospects for easing the Fed's monetary policy.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.08% to 104.94. Yesterday Fed Chair Powell gave a bullish assessment of where the U.S. economy stands, with an outlook for continued above-trend growth and confidence in falling inflation that, while eroded by recent data, remains largely intact. Powell acknowledged that the Fed's restrictive policies may take longer to bring inflation back to 2%, which means policymakers need to be patient and let restrictive policies do their job. Economists expect today's inflation report to show that CPI growth slowed to 0.3% m/m in April from 0.4% m/m in March. Meanwhile, core inflation - excluding food and energy - probably rose by 0.3% over the month and 3.6% per annum, which is a three-year low. Higher-than-expected consumer prices in the first quarter of the year were the driving force for a sharp repricing of the pace of Fed rate cuts, with those bets now pared back to about 0,45% of reductions this year compared with 1,5% of easing anticipated at the start of 2024. According to the CME FedWatch Tool, markets see a 3.3% probability of a 25 basis point rate cut at the Fed meeting in June, a 27.3% probability of a rate cut in July, and a 65.1% probability of monetary policy easing in September.
The Chinese yuan rose 0.1% against the US dollar, retreating from a 2-week low. The currency was supported by a message about a possible plan to reduce the housing shortage in China, which offset the negative side of the US president's decision to sharply increase tariffs on a number of Chinese goods. Increased optimism about China also affected the Australian dollar (China is Australia's largest partner), which rose by 0.3% against the US dollar.