Talking Points:
- US CPI for the month of May printed in-line with expectations at an annualized 2.8% on the headline read, opening the door for a rate hike out of the Federal Reserve at tomorrow’s rate decision. With a hike at tomorrow’s meeting long-expected, the bigger question is what the bank might be looking for in the second half of the year. At our last quarterly meeting in March, the central expectation at the bank was for three hikes, which would allude to one more after tomorrow’s move. Has the last quarter produced a backdrop with which the Fed can get more hawkish in the second half of 2018, looking for an additional two hikes to bring the total for this year to four?
- The US Dollar[1] posed a muted reaction around this morning’s inflation release, highlighting the fact that market participants are looking ahead on the economic calendar, as the next few days bring a considerable amount of potential for volatility. The Fed’s rate decision is followed by the ECB on Thursday morning, and after last week’s reports that the bank may begin to discuss options around stimulus-taper, Euro[2] has recovered from the May swoon that was driven by an uptick in political risk.
- DailyFX Forecasts on a variety of currencies such as the US Dollar[3] or the Euro[4] are available from the DailyFX Trading Guides page[5]. If you’re looking to improve your trading approach, check out Traits of Successful Traders[6]. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide[7].
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