Dollar up as traders await Fed clues; sterling rises
dollar rose against the euro on Wednesday as investors awaited Federal Reserve meeting minutes for insight into the central bank's interest rate path, while the pound strengthened on data showing UK inflation fell in April.
Investors have been shoring up U.S. rate cut bets after a milder inflation reading last week, even as Fed officials have continued to sound a cautious note.
Fed Governor Christopher Waller on Tuesday said he would need to see several more months of good inflation data before he would be comfortable supporting rate cuts.
That timeline was echoed by Cleveland Fed President Loretta Mester.
The Fed minutes from its April 30-May 1 meeting due later in the day may reflect more concern about higher-than-expected U.S. inflation in the first quarter, as the meeting was held before last week's consumer price inflation report.
«I doubt (the minutes) will set the market alight,» said Stuart Cole, head macro economist at Equiti Capital in London.
«We have had a pretty consistent message coming out from the Fed since the last meeting that further rate hikes are unlikely, but that cuts will also not be seen until the FOMC is certain that the stronger CPI pressures seen over the first quarter were only noise and that current policy settings are doing their job in curtailing aggregate demand,» he said.
«I cannot see these messages proving to be off-script from what the minute will say,» Cole said.
While markets remain hopeful that U.S. inflation will continue to cool, personal consumption expenditures
