Yesterday we saw lower-than-expected US CPI numbers from the US, with pressure piling on the dollar once again, taking GBPUSD and EURUSD higher across the day. Core CPI remained at 2.8%, instead of rising to 2.9%, year on year. The number once again caused Trump to hit the wires and call on the Federal Reserve (Fed) to cut rates by 100 basis points.
Trump also commented on talks with China stating that a deal is “done” and subject to approval by Xi Jinping.
Read more about the Federal Reserve's interest rate decisions here -When is the next Fed interest rate decision?
*Daily move - against G10 rates at 7:00 am, 12.06.25
** Indicative rates - interbank rates at 7:00 am, 12.06.25
It has been busy morning so far. After positive talks from the US and China yesterday, overnight Trump announced he’ll set unilateral tariff rates in a week or two, causing a risk sentiment fade in early trade and the dollar to weaken.
British pound sterling has taken a this morning adding to the disappointing job numbers on Tuesday. UK GDP in April sank to -0.3% versus the -0.1% expected, seeing markets ramp up the odds of an earlier rate cut by the Bank of England (BoE).
Before this week's economic indicators, the market anticipated a rate cut in November. However, the latest data has shifted expectations, with a potential rate reduction now on the horizon as early as August. The GBPEUR has hit a fresh one-month low, breaking through previous support levels, which may signal a continued decline towards the lows experienced in April.
Another set of inflation numbers is out today with the release of the PPI numbers. Another miss on the numbers and we're likely to see further weakness on the dollar. Couple of market calls last night, as well with Paur Tudor Jones, predicting a 10% slump in the dollar over the next year and Howard Marks told investors to take a cautious stance since Trump “values unpredictability”.
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