Traders will next be looking to Wednesday’s monthly U.S. consumer-price data, given the pace of inflation in April is expected to slow in a Bloomberg survey. That could spark a re-think in the market about how aggressive the Fed’s tightening path will be, according to Simon Harvey, head of currency analysis at Monex Europe.
“All it takes a minor slip in the core CPI reading for markets to go back to the drawing board,” said Harvey. “Especially because of the aggressive positioning we’ve been seeing, it only needs one slip for markets to want to pullback in Treasuries, money market pricing and the dollar,” he said, adding a weak reading could spark a dollar retreat toward 130 versus the yen.
--With assistance from Michael G. Wilson and Cormac Mullen.
This article was provided by Bloomberg News.