"Later today, inflation data will be released, with headline CPI expected to remain stable at 2.7% year-on-year. A downside surprise could weigh on the dollar and yields, as market participants may reinforce dovish expectations and increase confidence in further rate cuts. By contrast, signs of persistent inflation would likely lend support. Currently, expectations point to two rate cuts by the end of the year."
"Comments from New York Fed President John Williams on Monday offered some support to the dollar and yields. Williams said he expects the US economy to remain healthy in 2026 and sees no near-term reason to cut interest rates. He noted that monetary policy has moved from a modestly restrictive stance closer to neutral and is now well positioned to stabilize the labour market while guiding inflation back toward the Fed's 2% target."
The US dollar traded in a narrow range as investors awaited key economic data that could influence Federal Reserve policy and market volatility. Headline CPI is expected at 2.7% year-on-year; a downside surprise could weaken the dollar and yields by strengthening dovish expectations and boosting confidence in further rate cuts, while persistent inflation would support the currency and yields. Market pricing currently implies two rate cuts by year-end. Attention also focuses on the ADP Employment Change report after modest private payroll gains and a soft nonfarm payrolls print. Remarks from New York Fed President John Williams signaled no near-term reason to cut rates. Developments in the investigation involving Fed Chair Jerome Powell pose a risk to Fed independence and could weigh on dollar-denominated assets.
Read at London Business News | Londonlovesbusiness.com
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