In the Asian session on Thursday (May 11), the U.S. dollar index fell back from its high level. The latest price of the U.S. dollar was 101.38, a decrease of 0.05%. The latest CPI data report shows that inflation is showing a cooling trend as the aggressive interest rate hike cycle started by the Federal Reserve a year ago and the recent credit pressure gradually have an impact on the US economy. However, core U.S. price levels remain near record highs, and the U.S. job market remains strong.
The Fed will need to see multiple months of declining data to be confident that price pressures are on a sustained downward trajectory, especially after officials last week signaled they may pause rate hikes for now. U.S. stock futures jumped after the report, U.S. Treasuries rose and the dollar weakened. Wednesday’s report will be one of several factors that will influence Fed policymakers’ monetary policy decisions next month. They will also receive the consumer price index for May, as well as reports on the labor market and their favorite inflation measure, the personal consumption expenditures index. In addition, officials remain focused on ongoing banking stress and the extent to which this will further tighten credit conditions.
