Dollar surges on hot US inflation print
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Daily Currency Update
The US dollar soared yesterday as the latest US Consumer Price Index revealed a higher-than-expected increase in inflation for March. CPI rose to 3.5% from 3.2%, which was 0.1% more than anticipated. This caused markets to push back their expectations of the first interest rate cut from the Federal Reserve. As a result, GBP/USD plummeted from 1.27 to around 1.2520, losing approximately one cent in 15 minutes and ending the UK trading day at a low. Previously, it was expected that borrowing costs would be lowered in June, but now, markets predict that rates will be held until November to battle persistent price rises. The dollar has strengthened across the board as a consequence of this shift in expectations. EUR/USD also dropped from around 1.0860 to now sit at 1.0740. Although GBP/EUR witnessed some volatility, it is now back just under the 1.17 level.Key Movers
Looking ahead, there is another great risk event in the calendar, with the European Central Bank's (ECB) latest interest rate decision scheduled for lunchtime. Although no change in policy is expected, if ECB chief Christine Lagarde unveils a surprise cut, EUR/USD will likely take another leg lower. Most analysts anticipate that Lagarde will signal that a rate cut is coming at its June meeting, given that inflation is now at 2.4%, just above the bank's 2% target. Furthermore, we have more inflation data from the United States with the latest Producer Price Index number. There will likely be more attention drawn to this, given yesterday's volatility driven by CPI.Expected Ranges
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