Daily & Weekly Market News

Get access to our expert weekly market analyses and discover how your currency has been tracking with our exchange rate tools.

The US dollar index plunges despite a pick-up in inflation numbers

USD - United States Dollar

The US dollar fell 0.40 at the time of this writing. US consumer prices increased in April, which could support the Fed argument that recent low inflation readings were transitory and allow the central bank to keep interest rates unchanged for a while. The Commerce Department said early today that its Personal Consumption Expenditures (PCE) price index increased 0.3 percent in April, after rising 0.2 percent in March. That lifted the annual increase in the PCE price index to 1.5 percent from 1.4 percent in March. Fed Chairman Jerome Powell had noted that the soft inflation readings are temporary and the Fed has kept rates unchanged and it has signaled little inclination to adjust monetary policy anytime soon.

However, the MNI Chicago Business Barometer increased by 1.6 points to 54.2 in May from 52.6 in April, worse than the forecast of 55.1. The MNI report noted that despite the pick-up in sentiment, the survey points to softness in business activity. Furthermore, it is evident that business confidence in the second quarter is going to be significantly weaker than the first quarter, which was already at sluggish levels.

Key Movers

President Trump said he would impose a 5 percent tariff on Mexican goods, taking effect on June 10th, if Mexico does not stop immigrants from illegally entering the US.

Washington also cautioned that the tariff could rise as high as 25 percent by October 1 if the Mexican government does not fix the problem. The USD/MXN pair increased around 3.4 percent (Mexican peso weakening) by 6:30 am EST as market participants gave thought to the implications associated with the long list of Mexican goods.

Regarding China, the Asian nation is progressing with plans to restrict exports of rare earth minerals to the US if needed. Beijing is planning an essential retaliation against the US.

The Chinese manufacturing PMI in May came in at 49.4 versus the 49.9 expected, which is not good news for the Chinese economy because it is falling below 50.

Expected Ranges

USD/CAD: 1.3465 - 1.3561 ▲

EUR/USD: 1.1110 - 1.1169 ▲

GBP/USD: 1.2606 - 1.2640 ▲

AUD/USD: 0.6908 - 0.6959 ▲

NZD/USD: 0.6502 - 0.6545 ▲