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US Inflation Falls Again
The US Dollar has plunged to fresh multi year lows today on the back of yesterday US inflation release. Headline annualised CPI was seen falling to 2.4% in March, down from 2.8% prior and below the 2.5% the market was looking for. There were further undershoots on the monthly readings with core falling to 0.1% from 0.3% prior, below 0.2% expected and headline printing -0.1% from 0.2% prior, below 0.1% expected. The data has fuelled a jump in Fed easing expectations with the market now pricing in a .25% cut in June with a roughly 25% chance of a deeper cut.
Trade War Impact – Recession Fears
Alongside the deeper-than-forecast fall in US inflation, the Dollar is also suffering from the ongoing uncertainty around the US trade war. Trump’s comments yesterday, admitting some concern over the economic cost of the trade war, have further stoked economic fears in the US with recession risks creating headwinds for USD here. The sharp move higher in safe haven assets such as gold and JPY this week show that traders are turning away from the Dollar as a store of capital. Given the intensification of the trade standoff between the US and China and the prospect of a further escalation, USD looks likely to remain under pressure near-term as safe havens continue to draw inflows away from USD.
Technical Views
DXY
The sell off in DXY is accelerating into the end of the week with the market breaking down below the bear channel lows and the 100.38 level. Now sub 100 for the first time in over two years, focus is on immediate support at the 99.56 level which, if broken, opens the way for a deeper push towards 97.03, in line with bearish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.