US Inflation expectations retreat from weekly peak

While downbeat prints of the US PMIs for November and the Federal Open Market Committee (FOMC) Meeting Minutes were mostly highlighted for the US dollar’s latest weakness, softer prints of the US inflation expectations could also be cited as a USD-negative catalyst.

That said, the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, known as the key precursors for the US inflation, eased from the weekly top to 2.32% and 2.33% in their latest readings. In doing so, the inflation expectations fade the early week’s bounce off the lower levels since the initial September.

It’s worth noting that the Fed policymakers’ discussions on the ‘pivot’ level for rates, per the latest FOMC Minutes, gain additional support from the inflation expectations and can keep the US Dollar bears hopeful despite the recent inaction.

Hence, the Greenback’s weakness is likely to persist even if the Thanksgiving holiday and light calendar join the Covid woes to allow the USD bears to take a breather.

Also read: Forex Today: US Federal Reserve ready to pivot, US Dollar sunk