Home / Blog / Category / Fundamental Analysis / US Dollar Drops on Lower CPI, Rebounds Post-Fed Press Conference
13 June 2024 | FXGT.com

US Dollar Drops on Lower CPI, Rebounds Post-Fed Press Conference

  • US Dollar Experiences Volatility Amid Key Announcements: The US dollar had a turbulent day yesterday, influenced by major news events. During the early American session, the dollar dropped sharply after CPI inflation data came in lower than expected. This fuelled hopes for a more dovish stance from the Federal Reserve. However, following the Fed’s press conference and remarks from Chairman Jerome Powell, the dollar rebounded, recovering some of its earlier losses.
  • May CPI Shows No Monthly Increase: In May, the U.S. consumer price index (CPI) remained unchanged on a monthly basis, indicating a slight easing of inflation. On an annual basis, the CPI rose by 3.3%, slightly below economists’ predictions of a 3.4% annual rise. Core CPI, which excludes food and energy prices, increased by 0.2% monthly and 3.4% annually. Both figures were lower than anticipated.
  • Federal Reserve Maintains Interest Rates, Signals Limited Cuts: The Federal Reserve has decided to keep its key interest rate unchanged as expected, and further indicating that only one rate cut is anticipated before the end of the year.
  • FOMC Adjusts Rate Cut Projections: Following a two-day meeting, the Federal Open Market Committee (FOMC) removed two of the three rate cuts they had previously expected in March. The committee also signalled a higher long-term interest rate than previously forecasted.
  • Inflation Concerns: The Fed acknowledged that while inflation has eased, it remains elevated. There has been slight progress towards the Fed’s 2% inflation goal in recent months. New projections reveal modest optimism about inflation returning to the target, suggesting some policy easing later this year.
  • Updated Inflation Outlook: The FOMC raised its 2024 inflation outlook to 2.6%, or 2.8% excluding food and energy—both up by 0.2 percentage points from March. The Fed’s preferred inflation measure, the personal consumption expenditures price index, recorded April readings of 2.7% and 2.8%. The Summary of Economic Projections (SEP) forecasts that inflation will return to the 2% target by 2026.
  • Fed Chairman Powell’s Comments: In his press conference, Chairman Jerome Powell reiterated the Fed’s cautious stance, stating that more positive data is needed to ensure inflation is moving sustainably towards the 2% target. Powell emphasized that the Fed will likely maintain elevated interest rates to achieve sustainable progress towards its inflation goals.
Help us improve this article.
Disclaimer: Any material and information included herein are intended for general marketing purposes only and does not constitute investment advice or recommendation nor an invitation to acquire any financial instrument and/or be involved in any financial transaction. The investor is solely responsible for the risk of his investment decisions and if considers appropriate, he should seek relevant independent professional advice before making any decision. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. Please read full Non-Independent Investment Research Disclaimer here. Risk Disclosure: CFDs are complex instruments and carry a high level of risk of losing money. Read full Risk Disclosure here .

Blog Search

Categories

Blog Categories

Tag

Blog Tags

Register and Share Buttons EN

Register

Loved our latest article?

Share it with your friends and followers!

Copied to clipboard
To top

Leveraged products may not be suitable for everyone and may result in loss of all your capital. Please ensure you fully understand the risks involved and whether trading is appropriate for you. Read Full Risk Disclosure here.