Mixed week for the Greenback that initially benefitted from the swing into global risk-off mode, but weaker-than-expected core inflation reads had traders pulling back on dollar longs.
United States Headlines and Economic data
Monday:
- Trump’s Tariff Threat Leaves Beijing Stalling on Next Talks – global financial markets jumped into risk aversion mode after news of Trump’s tariff threat to China, prompting a sell off in risk assets and flows into safe havens. Likely why we saw the Greenback start the week higher against the majors with exception to the usual top safe haven currency of the Japanese yen
- Lighthizer accuses China of ‘reneging’ on promises, says tariffs will rise Friday
Tuesday:
- Fed’s Kaplan optimistic U.S., China will find ways to tackle trade issues
- China confirms vice-premier Liu He will visit US for trade talks
- Fed’s Quarles says he could live with an inflation rate that is below the 2% target
Wednesday:
- U.S. mortgage applications post biggest fall in four months: MBA
- Fed’s Barkin: Low unemployment and interest rates mean low recession risk
- Brainard: Fed should consider targeting longer rates in a future downturn
Thursday:
- U.S. wholesale prices increased 0.2% in April, PPI shows
- Fed’s Williams: Core inflation ‘a touch too low,’ but so far looks like normal volatility – the weaker-than-expected core number is likely the reason for the weakness in the Greenback, reducing the probability of rate hikes for now.
- U.S. weekly jobless claims fall less than expected
- Fed Chair Powell says policies are needed to address slow income growth
Friday:
- Trump’s 25% China tariffs begin as trade talks between two nations continue
- US-China talks break up after US raises tariffs
- Fed’s Bostic says tariff hikes could prompt rate cut if consumers pull back
- US consumer prices rose in April, but underlying inflation remains tame
- Fed’s Brainard says income inequality may be hampering U.S. economy
