The March US consumer price index announced yesterday was +5.0% year-on-year, slowing down significantly from the previous +6.0%. As the price fell below market expectations, the currency market strengthened the reaction to sell the dollar. However, the core year-on-year rate of increase was +5.6%, up from +5.5% in the previous survey, in line with market expectations. In the stock market, deep-seated inflationary pressure led to a decline in speculation that interest rate hikes would be halted early, and the stock market was pushed to sell.
Although the movements were different for each market, the 25bp interest rate hike speculation at the May FOMC meeting was even more solid. The US FOMC meeting minutes partly referred to financial instability, and the aggressive stance of raising interest rates was sealed off. The focus seems to have shifted to when the U.S. will stop raising interest rates and start cutting interest rates.
With the near-term major US indicators now available, it is likely that there will be more interest in indicators for major countries other than the US, such as Europe, the UK, and Japan. The ECB’s willingness to raise interest rates appears to be becoming a theme in the market. The euro/dollar exchange rate is at the 1.10 level, and attention will be paid to whether the pair will maintain this level and search for higher prices.
The flow is completely USD selling perspective.
Today at 21:30: The US March Producer Price Index (PPI) is also directly linked to inflation, so it is assumed that the USD may move significantly. Pay attention to price movements after this.