US inflation suggests a delay to a cut in Fed rates
A stronger than expected print in consumer price inflation has sent equities down and the dollar up in what is now thought to a turning point in rate expectations.
Last week there was a 55% chance of a 25bps cut in US rates on 1 May, this is now 32% and economists are suggesting that investors will now have to wait until the second half of the year for any move. IGTV’s Jeremy Naylor looks at the turn in the markets and where next.
(AI Video Summary)
US inflation rate causes stock value, EUR/USD to decline
The recent inflation rate in the US has caused some trouble in the stock markets, making them go down in value. Right now, people are paying close attention to the currency markets, especially the euro-dollar (EUR/USD). The EUR/USD has dropped a lot and is now lower than it has been before. This drop happened because the inflation numbers were stronger than expected. It also means that the chance of the Federal Reserve cutting interest rates has gone down. This is not good news for the tech industry, which relies on growth stocks.
Fed rate cuts unlikely any time soon
These stocks have gone down in value because people are worried that interest rates won't be cut. This trend is expected to continue during the US trading session, as investors are moving their money into US dollars. The market is currently uncertain and cautious because of the higher inflation rate, which has changed people's expectations for how the Federal Reserve will act and how the market will perform. Traders and investors are keeping a close eye on the currency markets, especially the EUR/USD, as it might provide good trading opportunities with all the recent changes.
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