The US Dollar stabilised to a certain extent, paring recent losses, supported by hawkish comments from Fed officials.
Philadelphia Fed President Patrick Harker emphasized the resilience of the US economy and persistent inflation as reasons to keep rates steady.
Fed Governor Christopher Waller also advocated for keeping rates at restrictive levels, though he left room for cuts if inflation shows signs of slowing.
Meanwhile, US Treasury yields rebounded, with the 10-year note holding firm at 4.5%. If today’s speeches from other Fed officials reinforce the Fed’s hawkish tone, both Treasury yields and the US dollar could see further gains.
However, markets are currently pricing in a rate cut as early as July, which is earlier than previously anticipated. Despite solid economic growth, disappointing retail sales and softer components of the PPI data have fueled rate cut expectations, putting pressure on the US Dollar. Additionally, global political developments, such as peace talks regarding the Ukraine conflict and key economic releases, including the FOMC minutes, could further influence market sentiment.
