The US Dollar Index remained just under the recently struck 4 ½ month peak after CPI data missed analysts’ forecasts. The news prompted some FX traders to shift sentiment on the timing of the next Federal Reserve Bank rate hike. According to the US Department of Labor Statistics, April’s core CPI was flat at 2.1% against an expected rise to 2.2%. It was also reported by the Labor Department reported that initial jobless claims for April was flat at 211K while continuing claims was higher at 1.790M.
As reported at 10:06 am (JST) in Tokyo, the USD/JPY was trading at 109.276 Yen, down 0.12%; the pair earlier hit a session trough of 109.195 Yen. The AUD/USD was trading at $0.7537, a gain of 0.0678% while the NZD/USD was trading at $0.6968, up 0.0279%.
Fed Outlook Appears Murky
Given the data, FX traders are less certain of the Federal Reserve’s likely next move; until recently, traders had expected a more aggressive tightening policy. One currency strategist says that investors are worried about upside inflation risks given the rise in oil prices coupled with US tax cuts and a weakening US Dollar. A speech later today by James Bullard, one of the voting members of the Fed’s Federal Open Market Committee, could provide some insight for FX traders.