The dollar showed stability against major currencies as market participants awaited U.S. inflation data, anticipated to influence the Federal Reserve's stance on borrowing costs in 2024. Recent U.S. labor market figures, softer than expected, alongside the Federal Reserve's indication against further rate hikes, have led to expectations of monetary easing. Current market predictions suggest an 80% probability of a Federal Reserve rate cut by its September meeting, with an anticipated total reduction of around 40 basis points in 2024, according to LSEG data.
Opinions among Federal Reserve officials have varied, reflecting a debate over the adequacy of current interest rates. A survey revealing an increase in consumer inflation expectations could add complexity to these discussions. With indicators of a slight economic slowdown after the strong growth experienced in 2023, investors are keen to assess the persistence of inflation. Upcoming U.S. inflation reports, including the producer price index (PPI) and consumer price index (CPI), are expected to provide further clarity.
Source: reuters.com