The Greenback trades lower following inflation numbers and declarations by Fed officials.

OFX Daily Market News

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USD – United States Dollar

It has been a quite a busy morning for the U.S. dollar with speeches by five Fed speakers and the release of inflation numbers. The U.S. dollar has fallen following the release of U.S. consumer prices, which declined by the most in a record in April. The core consumer price index (which excludes food and fuel) fell 0.4 percent after a decrease of 0.1 percent in March, while the expected number was only -0.2 percent. Overall, inflation fell 0.8 percent in April since March.

The U.S. dollar is lower against most of its G10 peers, except for the Pound. The U.S. dollar has fallen 0.1, 0.62, and 0.34 percent against the Loonie, Euro and Aussie dollar, respectively. However, it has increased 0.19 percent against the British Pound.

A significant trigger of the Greenback’s weakness took place after Federal Reserve speakers talked down the notion of negative U.S. interest rates. St Louis Fed President James Bullard said negative rates would not be a good option for the U.S., and Dallas Fed President Robert Kaplan said he would be against negative rates.

Tomorrow, Fed Chairman Jerome Powell is expected to appear in a webinar discussing current economic issues, where he might reinforce that NIRP is not the desired policy option. This might help the USD after some of the weakness experienced until now.

Key Movers

Anthony Fauci, the top infectious disease official in the U.S., said he does not see a coronavirus vaccine being ready until fall. He also noted that Americans face needless suffering and death if the economy reopens too soon.

The Japanese Yen has climbed as China’s ban of Australian meats generated concern about trade agreements. Furthermore, there is escalating tension between the U.S. and China; the Trump administration moved on Monday to block investments in Chinese stocks by a government retirement fund.

Some Chinese advisers think Beijing should rip up the current trade pact with the U.S. and start over. Donald Trump’s effort to shift blame over the pandemic to Beijing angers officials.

Expected Ranges

USD/CAD: 1.3851 – 1.4050 ▼

EUR/USD: 1.0767 – 1.0892 ▼

GBP/USD: 1.2248 – 1.2342 ▼

AUD/USD: 0.6412 – 0.6545 ▼

NZD/USD: 0.6064 – 0.6133 ▼


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