“It brings more life to the view that the Fed is nearing the end of its cycle,” said Bipan Rai, global head of foreign exchange strategy at CIBC. “We can’t say that definitively for a few of the other major central banks out there, and it’s a strong indicator of US dollar weakness.”
Excluding food and energy, the US Consumer Price Index – which economists consider to be better indicator of core inflation – an advance of just 4.8% from a year ago, the lowest since late 2021 but still above the Fed’s target.
This sent the dollar to its lowest level since April 2022 and pushed down Treasury yields. Chances of an additional Fed rate hike after this month’s expected hike have dipped below 50%.
About 27 of the 31 major currencies tracked by Bloomberg rose on Wednesday after reading inflation in the United States, with some of them approaching key levels.
The franc’s rally has pushed the Swiss franc away from its highest levels since early 2015, when the Swiss National Bank roiled markets around the world with unexpected decision To abandon the currency cap against the euro. Meanwhile, the British pound is rising against $1.30, a level it has not touched in a year.
Al-Kindi also acquired the Bank of Canada Starch The benchmark interest rate, which delays the timetable for inflation to return to target while revising growth upward.
The rally rippled across emerging markets, too. The offshore Chinese yuan rose to its strongest level in nearly three weeks, while the MSCI Inc. Developing economies’ currencies extended their longest winning streak since May.
“Inflation is the main issue right now, that’s trade,” said Jordan Rochester, a strategist at Nomura. On the Fed’s rate hike path going forward, “the July idea and what has been implemented will likely gain more credibility on the street.”