Economy

US Dollar Index Slides After Bets on Rate Cut Rises

US Dollar Index Slides After Bets on Rate Cut Rises”

The Federal Reserve's Federal Open Market Committee, charged with setting key US interest rates, could decide to cut rates in coming months given recent weak job and inflation data.

The US consumer price index - which tracks costs for household goods and services - rose a token 0.1% compared to April, matching analyst forecasts, the Labor Department reported. The month-on-month rate is expected at 0.1%, down from 0.3% in April, while core CPI is forecast to remain unchanged at 2.1% y/y.

NEW YORK, June 11 (Reuters) - Stock indexes around the world gained on Tuesday as investors piled into riskier assets as they bet on Federal Reserve interest rate cuts and that a U.S.

Falling unemployment rates and a pick-up in wages have done little to push prices higher.

The retail sales figures will be just as, if not more important. But it's still 22 basis points below the current effective fed funds rate, signaling traders see nearly a 90% chance of a quarter-point reduction by the end of July.

With fears easing that the United States would launch a trade war with Mexico, investors appeared to shrug off President Donald Trump's threat to impose more tariffs on China if no progress was made in talks with President Xi Jinping.

Below-forecast inflation follows signs of slower economic growth in the US that would only bolster investor expectations for Fed rate cuts this year.

A report on Tuesday showing core producer prices advancing solidly for a second consecutive month in May had offered hope for a firmer core CPI reading in May, as well as in the inflation measure tracked by the Fed for monetary policy. Last week, data from the Labor Department showed that the U.S. economy created just 75k jobs.

"The weakness in inflation is starting to look less transitory", said Leslie Preston, a senior economist at TD Bank. The inflation data is released first on Wednesday at 12:30 GMT, followed by the retail sales report on Friday, at the same time.

USA inflation was 1.5% in April, according to the Fed's preferred gauge, and has been under its 2% target for most of the last seven years. But the prices for prescription medication fell 0.2 per cent.

Shelter prices - the largest component of the index - increased 0.2% in May, after notching gains of 0.4% in the previous two months.

-Food costs rose 0.3 per cent from the prior month after a decline in the prior period; Expenses for medical care commodities were down 0.4 per cent.

The index for used cars and trucks slumped 1.4% in May, the fourth straight decline.



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