The U.S. Dollar is trading in mostly tight ranges following the release of inflationary growth in the form of Consumer Price Index.
CPI excluding food and energy costs rose by 0.2% and is averaging 2.1% annually. Prices being on the rise this much helps the Fed continue its tightening path. Additionally, Real Avg. Weekly Earnings are up 0.9%, a higher reading than the month prior at 0.6%. Economically, things look great, but the greenback is not benefiting.
We will see if FX markets reward indicators or if speculation over European growth keeps currencies such as EUR, GBP, and CHF surging. The Bloomberg Dollar Spot Index is less than half a percent weaker this month although we have witnessed swings. The current level may remain as trade war woes start fading, but remain in the minds of policymakers and traders.
The Euro is holding afloat only as a result of worries over trade policy that sank the dollar earlier in the month. Retail Sales and Purchasing Managers Index figures are painting a picture of stagnation and many experts are pointing out that Euro-zone growth levels may be at their peak.
This disagrees with the hawkish sentiment from the Ewald Nowotny, a finance official who is pushing for the ECB to consider cutting easing measures sooner rather than later. It seems the accommodative environment will remain until September, but summer weakness in economic performance may lead to USD gains instead.
The Pound climbed recently based on inflationary figures and likely will see some further upward movement based on higher chances of a hike by the Bank of England. The next announcement will be made on May 10th, but already officials are putting in their support towards interest rate increments to prevent prices from getting out of control. There is no major Brexit news now, but there is some positivity behind Scandinavian countries that are willing to make things a little easier on Great Britain to work on commercial deals after Brexit.