As a safe haven currency, the US dollar continued to fall sharply this week, continuing the downward trend since early March. Meanwhile, the risk-sensitive Australian and New Zealand dollars outperformed other major currencies. The US dollar index has fallen to a new low since February this year, and if the decline continues on Friday, it is expected to record its worst weekly performance since early January.
In a situation similar to February, the US dollar index retreated again towards the 100 mark, while at the same time, gold surged and moved closer to an all-time high.
Compared to two months ago, when cooling inflation was a general psychological expectation, this time after experiencing the turmoil in the banking industry, more data indicated that the Federal Reserve’s interest rate hikes may be coming to an end .
Guidance on the latest inflation data
Earlier, the US Labor Department announced that US CPI rose 5% year-on-year in March, beating market expectations of 5.2%, and hitting a new low since May 2021. Core CPI increased 5.6% year on year, rebounding from 5.5% in the previous month, in line with market expectations.
Although the CPI in March was better than expected, the drop in CPI in April will be hampered by production cuts from oil producing countries. In March, oil-producing countries pushed for production cuts of 1.66 million barrels, causing crude oil prices to return above 80 yuan.
The price of used cars, which had previously been falling, appears to be showing signs of bottoming out. The month-on-month drop in used car prices fell to -0.9% in March, compared to 2.4% in the previous month. The month-on-month increase in new car prices widened to 0.4%, compared with 0.2% in the previous month.
Housing inflation moderated. House rent fell to 0.5% from 0.8% in the previous month, and owner occupier equivalent rent fell to 0.5% from 0.7% in the previous month.
In addition, the PPI in the US increased by 2.7% year on year in March, below the expected 3%, and also fell sharply from the previous value of 4.6%, the smallest annual increase in more than two years. The number of jobless claims at the start of the week in March was 239,000, which was higher than the 235,000 expected.
The trend is unfavorable for the dollar to strengthen
Que Nguyen, chief investment officer of equity strategy at Research Affiliates, said: “Basically, the data shows two things, the first is that inflation is not a surprise, and at the same time, the market seems to jobs are stable. what we have today is a kind of The optimistic forecast that we will have a situation almost like Goldilocks where inflation will slow down but the economy will not collapse.”
FHN financial analyst Christopher Low believes that for the Fed, which is already inclined to delay a rise in interest rates, this report is only slightly inclined to raise interest rates, and the connection is not between PPI and CPI as clearly as before, but the small increase continues Ultimately it affects consumers.
In addition to the part of the data that supports the approaching peak of interest rates, under the trend of global de-dollarization, countries are also reducing the allocation of the US dollar, which is not favorable to the strength of the US dollar.
New Constructs chief executive David Trainer looked further into the banking sector. He said bank lending is arguably the most important component of a strong economy, so insights from bank CEOs are critical now, with investors counting on strong earnings to help the stock market rally to date continue, and that what’s to come There’s a reason why first quarter earnings season is so important.
