The USD progressed higher throughout last week, with risk sentiment being mostly negative. On Friday, the USD picked up further momentum in the Europe
The USD progressed higher throughout last week, with risk sentiment being mostly negative. On Friday, the USD picked up further momentum in the European session, but if you were to glance at stock markets in the US session, you would get the impression that sellers were in charge, as we saw a decent retreat which sent the buck nearly 1 cent lower against most assets until the close of the week.
On the news front, there wasn’t much to digest after the strong retail sales report for January and the hot producer inflation (PPI) report on Thursday. One of the reasons for this might have been comments from FED’s Barkin who downplayed the recent CPI and retail sales numbers as potentially skewed by seasonals. The other FOMC member Bowman expressed angst and uncertainty about inflation.
Comments from FOMC Member Barkin
- Not taking signals from jobs & retail sales due to seasonal adjustments
- 25 bps rate path offers flexibility to respond to data
- There are absolutely some segments of the economy where inflation is slowing, some like food and utilities that are less so
- Fed that on inflation the US is making ‘slow progress’
- Excess savings, fiscal spending and employers holding onto workers may be the offsetting impact on FED rate increases
- Controlling inflation will require more rate increases, how many “we’ll have to see”
These are some more-constructive comments from a FED official who is usually close to the core, particularly the seasonal adjustment comment on the January numbers. Besides that, it is bank holiday weekend in North America which might have triggered a bid for safety in stocks ahead of the weekend.
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