Let's say you are the Director of Marketing for an American-based electronics company. You import parts for your products and sell those products both in the US and to a worldwide market. Each morning you read the Wall Street Journal and recently you came across the following column. What does this mean for your business, and how do you capitalize on the situation? Dollar Falls After U.S. Inflation Data
Let's say you are the Director of Marketing for an American-based electronics company. You import parts for your products and sell those products both in the US and to a worldwide market. Each morning you read the Wall Street Journal and recently you came across the following column. What does this mean for your business, and how do you capitalize on the situation?
Dollar Falls After U.S. Inflation Data
Weaker-than-expected Labor Department numbers dent expectations for U.S. interest-rate increases
The data is the latest in a string of weak inflation readings that investors worry will derail the Federal Reserve’s plans to raise interest rates again this year.
Markets are now pricing in just a 36% chance of another rate increase this year, down from 47% a week ago, CME Group data shows. Expectations that rates will remain lower weigh on the dollar by making U.S. assets less attractive to yield-seeking investors.
“Inflation…gives little reason for the Fed to raise rates until year-end, as most inflation dynamics are still pointing to the downside,” said analysts at UBS in a research note. “We believe that the [U.S. dollar] is likely to stay under pressure until year-end. ”
Meanwhile, investor demand for currencies seen as safe moderated despite continued threats between the U.S. and North Korea. The dollar was essentially flat against the Japanese yen and Swiss franc, which have been supported in recent days by demand for safety.
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