Most participants at the Fed’s May meeting felt that 50 basis point hikes would likely be appropriate in June and July to combat inflation. which, they agreed, “had become a key threat to the economy’s performance, according to minutes released Wednesday.”
This day it became known that many of the participants believed that making rapid rate hikes would leave the Fed well positioned to assess the effects of monetary tightening later in the year.
“That points to a more moderate tightening cycle in the future”said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management.
It should be noted that the index reached a maximum of almost two decades above 105 units in the middle of the month. However, signs that the Fed’s aggressive action may already be slowing economic growth prompted traders to cut bets on higher rates, with Treasury yields also slipping from multi-year highs.
In fact the data published on Thursday showed that the number of Americans filing new claims for jobless benefits fell last week, indicating a continued tightness in the job market.
In addition, the Commerce Department confirmed that the economy contracted in the first quarter under the weight of a record trade deficit and a slightly slower pace of inventory buildup compared to the fourth quarter.
Meanwhile, the euro rose 0.37% to $1.0719, while the dollar depreciated 0.011% against its Japanese pair at 127.55 yen. Sterling, meanwhile, was up 0.1% at $1.2596.
Source: Ambito
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