Dollar firms against peers ahead of inflation test
dollar steadied against peer currencies on Friday after a downward revision to U.S. GDP for the first quarter suggested room for the Federal Reserve to cut interest rates this year, while investors braced for a key inflation report.
Official data showed overnight that the U.S. economy grew at an 1.3% annualised rate from January through March, down from the advance estimate of 1.6% after downward revisions to consumer spending.
The revision keeps the Fed on track to potentially cut rates at least once this year and renewed some hope that those cuts will come sooner rather than later.
Markets currently priced in a 55% chance of rate cuts to begin in September, up from 51% a day before, according to the CME Group's FedWatch Tool.
U.S Treasury yields, which had boosted the greenback to its highest since May 14 at 105.17 on Thursday as they marched to multi-week peaks, slipped after the release of the GDP data.
The dollar index consolidated around 104.82 after dipping as low as 104.63 overnight.
While the GDP revision was helpful in adding to signs that growth may be slowing, the Fed will likely need more data before it feels comfortable enough to begin cutting, said Sim Moh Siong, currency strategist at the Bank of Singapore.
«The U.S. economy looks resilient even though there are signs of slowing at the edges… I think the main struggle that U.S. inflation remains sticky hasn't really changed.»
The market now looks ahead to the release of the Fed's preferred measure of inflation, the Personal Consumption
