US Dollar Weakness Unfazed by Consumer Confidence, Inflation Expectations

2021-05-14 14:00:00

Thomas Westwater,

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Consumer Confidence, US Dollar, Inflation Expectations – Talking Points
US Dollar 1-Minute Chart
US DOLLAR TRADING RESOURCES

Consumer Confidence, US Dollar, Inflation Expectations – Talking Points

US Dollar largely unfazed on weaker Michigan headline figure
Consumers’ inflation expectations tick higher, 5-year at 3.1%
Next week’s FOMC Minutes may provide next shift for Greenback

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The May Surveys of Consumers report from the University of Michigan crossed the wires at 82.8 versus an expected 90.4 consensus forecast and up from the prior month read of 88.3. The US Dollar appeared largely unfazed following the release, keeping attention on the weaker than expected retail sales figure. The downbeat data shows a still-fragile economy despite massive monetary and fiscal stimulus.

US Dollar 1-Minute Chart

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US Dollar upside from the hot consumer price inflation (CPI) print earlier this week has now been nearly wiped out. The Greenback rocketed higher earlier this week as rate traders pushed their expectations for the Federal Reserve to tighten policy sooner than previously thought. The Federal Reserve, however, is standing firm on the view that the uptick in inflation will be a temporary phenomenon and that inflation will cool as pent-up demand in the economy is exhausted.

The University of Michigan survey has its own component on inflation expectations, which helps gauge the outlook consumers have on forward price pressures in the economy. The 1-year expected change in inflation crossed the wires at 4.6%, while the farther out 5-year expected change came in at 3.1%. Investors now have a close eye on inflation – given the implications toward Fed policy – and next week’s FOMC Minutes may help gauge the Fed’s outlook further.