Currency markets saw another rangebound trading session yesterday ahead of today’s key US Inflation data and minutes from the recent FOMC meeting. Sterling eked out small gains after the British Retail Consortium reported UK Retail Sales rose at their fastest pace since August, hitting 3.2% year-on-year versus expectations of 1.8, as early Easter discounting drove up food sales. The US dollar continues to trade sideways despite rising Bond Yields, as expectations of a soft-landing gain in strength.
*Daily move - against G10 rates at 7:30am, 10.04.24
** Indicative rates - interbank rates at 7:30am, 10.04.24
All eyes are firmly focused on the US inflation data due out later today, which is expected to show a monthly increase of 0.3%. Recent commentary from the Fed hawks, reducing their forecasts for rate cuts this year from 3 to “1 or 2”, has lifted US bond yields, but interestingly has to date failed to rally the US dollar. The improvement in general market sentiment, as evidenced by rising global equity markets, could be at play here as riskier currencies continue to attract inflows.
With rising prices for commodities like Oil, Copper, and Cocoa, central banks may well have their work cut out for them to finally conquer the inflation demons.
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