020 7898 0500On Friday, the dollar hit its lowest levels in more than 2.5 years against a basket of currencies following reduced expectations concerning a Federal Reserve interest rate hike this year. New York Fed President William Dudley gave a speech last Thursday saying that the central bank should continue gradually reducing interest rates given that low inflation should rebound. He didn’t sound all that confident though, especially given his previous hawkish comments.
The tone Dudley struck contributed to safe haven US Treasury bond yields falling which reduced demand for the dollar and weakened it. This, coupled with strength from both sterling and the euro caused some significant moves last week.
Moving on to this week, it’s a fairly quiet start but PPI data on Wednesday, followed by inflationary CPI data on Thursday and core retail sales on Friday makes it a fairly hectic schedule. The core retail sales will be watched intently as they could help further clarify what the Fed is likely to do regarding interest rates.
