This Week’s Focus: US Inflation Data
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Daily Currency Update
This week, the focus shifts to the release of US inflation data, which should provide insight into the potential duration of elevated interest rates. The US dollar remained stable against key currencies this morning as investors await US inflation figures to assess the likelihood of interest rate decreases this year.Following April's weaker-than-anticipated US payrolls data and what seems to be a more accommodative stance from the Federal Reserve in its recent policy statement, anticipation has grown for potential rate cuts in the coming months. Currently, markets indicate a probability of over 60% for some form of rate cut starting at the Federal Reserve's September meeting, with an overall expectation of around 50 basis points in cuts for 2024.
Key Movers
The ECB's Governing Council remains cautious, fearing that a rate reduction could reignite inflation, potentially necessitating a reversal. Consumers are unlikely to return to shops in significant numbers until rates have been decisively lowered. The market continues to anticipate a cut at the Governing Council's upcoming meeting, set for early next month, although there is ample time for this expectation to change.Expected Ranges
- GBP/USD: 1.2495 - 1.2575 ▲
- GBP/EUR: 1.1565 - 1.1635 ▼
- GBP/AUD: 1.0745 - 1.0815 ▲
- EUR/USD: 1.8895 - 1.9025 ▼