A decrease of the indicator value may contribute to the fall in quotes of USD.
A decrease of the indicator value may contribute to the fall in quotes of USD.
According to Bloomberg, swap traders have lowered expectations for interest rate cuts by the US Federal Reserve (Fed) for the rest of this year. They now project the Fed to make just two steps in reducing borrowing costs in 2025.
American stock indexes rose and stabilized on the evening of May 12 following the announcement of a US-China trade deal. Traders' attention will now shift to upcoming key Consumer Price Index (CPI) data.
US inflation likely accelerated in April following a March slowdown, as higher tariffs on Chinese goods began pushing up prices. According to Bloomberg’s median economist forecast, the Consumer Price Index (CPI) rose 0.3% month-over-month.
On Tuesday, the dollar gained significant strength after China and the US agreed to a 90-day rollback of import tariffs they had imposed on each other. According to Reuters, the news triggered a relief rally in the markets.
An increase of the indicator value may contribute to the rise in quotes of USD.
On Monday, May 12, the United States and China announced an agreement to temporarily reduce mutual tariffs. The world's two largest economies are seeking to end a trade confrontation that has weighed on global economic prospects and put financial markets under severe pressure.
American stocks and the dollar rallied after China and the US reported major breakthroughs in two-day talks over the weekend aimed at easing trade tensions between the two countries.
Federal Reserve Governor Michael Barr and New York Fed President John Williams both warned late last week that Trump's policies are negatively impacting the nation's economy. More US officials stated this point recently, Yahoo Finance reports.
The US consumer price index (CPI) is set to show a significant rise in April, after a gradual increase over the past 9 months. It is connected with the intention of companies to pass the rising expenditures caused by tariff from the administration of US President Donald Trump to consumers.
The United States has been negotiating with China over their trade relations. Recent developments indicate visible progress in these talks. Reinforcement of positive market expectations is favorably affecting commodity prices as well as the dollar, according to Reuters.
The dollar is the monetary unit of the United States (US). It is also used as the official currency by some other countries (Ecuador, Zimbabwe, El Salvador). The dollar holds a leading position in the world economy.
At the moment, the dollar dominates the system of international settlements with almost 50% share (the euro ranks second with less than 25%). Meanwhile, the dollar's dominance is even more pronounced in the financial sector, on the foreign exchange market, and in the government reserves.
The US currency (USD) quotes, as well as those of its foreign counterparts, depend primarily on the economic and political situation in the issuing country. The US authorities, such as the Federal Reserve System (the Fed) and the Department of the Treasury, influence the dollar exchange rate by changing their monetary, fiscal, budget, and tax policies.
Moreover, the value of the dollar may be significantly affected by the latest news and the international situation. Global economic problems and rising geopolitical tensions have historically been favorable for the US currency, as investors consider it one of the major safe-haven assets, along with gold. In contrast, during periods of strong economic growth and a relatively calm global environment, the demand for the dollar tend to reduce.