Markets Pause After Dollar Drop as Investors Await Fresh Cues from Central Banks
π Markets are steady this morning, with limited data on the calendar. The spotlight now shifts to Fed commentary, especially from Governor Waller, which could shape near-term direction for the dollar.
Key Market Takeaways:
- Dollar momentum fades: The initial optimism around U.S.–China tariff relief has begun to lose steam, prompting a shift in market sentiment.
- Investor focus shifts: With trade-related enthusiasm cooling, attention is turning back to fundamentals and upcoming economic data.
- Greenback under pressure: As the boost from tariff news fades, the dollar faces renewed selling pressure from traders reassessing rate expectations.
Market Recap:
1. Dollar Retreats on Softer U.S. CPI
U.S. inflation data came in below expectations yesterday, prompting a broad pullback in the dollar. This reversed some of Monday’s strength and reinforced investor expectations for rate cuts ahead.
Market view: Despite dovish market pricing (two rate cuts still expected), major institutions like Goldman Sachs and Barclays forecast only one cut this year, highlighting a growing disconnect between markets and central bank guidance.
2. Pound Steadies After Jobs Data
UK employment figures released earlier in the day pointed to cooling wage growth — a signal that inflationary pressures may be easing.
GBP reaction: The pound traded mixed through the session, as markets balanced softer wage growth with steady unemployment figures.
BoE outlook: Slower wage momentum could give the Bank of England more room to cut rates, aligning with expectations for two cuts later this year.
Today’s Market Update:
πΉ Markets Stabilise After Dollar Dip
After Tuesday's sharp U.S. dollar sell-off—driven by softer-than-expected CPI data—a more measured tone has returned to global markets this morning.
What it means: Investors are now reassessing the inflation outlook and potential Fed rate cuts, with the dollar showing signs of continued vulnerability unless new catalysts emerge.
πΉ Eurozone Focus: German CPI (Final Reading)
Today’s economic calendar is relatively light, with only the final German inflation figures due.
Market impact: As these are revisions rather than fresh data, they’re not expected to spark significant euro volatility.
πΉ Central Bank Watch
Fed Speakers Lined Up Attention turns to central bank commentary, particularly from Federal Reserve Governor Christopher Waller later today.
What to watch: Any dovish signals could reinforce dollar softness, while unexpected tariff headlines or hawkish surprises may reverse that trend.
14th May 2025ο»Ώ
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