Currency news

USD trades stronger on less rate cut bets

Thanim Islam
Profile
Head of FX Analysis at Equals Money
-
3
min read
Publish date
11/04/24
  • Hot CPI number drives USD
  • US PPI and ECB in focus today


Recap

A higher-than-expected CPI number yesterday saw US 10-year treasury yields soar to 4.5%, taking GBPUSD and EURUSD towards the lows of this year, a key support level that continues to hold, with dip buyers holding up each respective pair. Market pricing now sees the Fed's rate cut now more likely coming in September.

Today

Market rates

*Daily move - against G10 rates at 7:30am, 11.04.24

** Indicative rates - interbank rates at 7:30am, 11.04.24

Table - 2024-04-11T083255.097

Data points

Table - 2024-04-11T083257.518

Speeches

  • EUR: ECB Lagarde
  • GBP: BoE Greene
  • USD: Fed Williams, Barkin, Collins, Bostic

Our thoughts

Yesterday's US CPI numbers now rules out any rate cut prospects for June and July by the Fed, with markets putting a 90% chance of a hike in September and only pricing in 40 bps worth of cuts this year. Both GBPUSD and EURUSD are trading at 2024 lows, with markets still on the side-lines waiting to drive USD stronger. Today's attentions falls on the PPI inflation numbers, and an uptick on this data will likely cause more USD gains. Also we wait for the ECB. No change is expected in interest rates, but we look out for what the communication is from Christine Lagarde.

Chart of the day

Market pricing on Fed rate cuts has changed considerably this year, with continued inflationary pressures over in the US. At the start of the year, markets were pricing in 150bps worth of cuts, and this has been whittled down to just 40bps. The USD index continues to trade higher to the November 2023 highs, tracking treasury yields, and we now wait to see if both GBPUSD and EURUSD fall to similar levels.

11042024 cotd
Source: Bloomberg Finance L.P.

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About the author
Thanim Islam
Profile
Head of FX Analysis at Equals Money

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