Milad Azar
The US dollar traded in a narrow range on Wednesday, as investors awaited pivotal inflation data that could shape the Federal Reserve’s next move. Producer prices are due later today, followed by Thursday’s consumer price report, both seen as decisive in determining monetary policy decisions.
Labor market revisions earlier this week reinforced the dovish backdrop. The Bureau of Labor Statistics said the economy likely created 911,000 fewer jobs in the 12 months through March. Combined with last week’s payroll miss, the data underscored the slowdown in hiring that has already left investors fully pricing a cut at the September 16–17 meeting.
Treasury yields were little changed, with the 10-year note near 4.08%, reflecting markets’ wait-and-see stance ahead of the inflation test. Yields could react to upcoming inflation data. Softer-than-expected prints would bolster calls for aggressive easing and likely extend pressure on the currency and drag yields lower. Conversely, firmer inflation could provide temporary support.
Politics continues to add to the clouded outlook. A court ruling temporarily blocked President Trump from removing Fed Governor Lisa Cook, prolonging an unprecedented legal battle over the central bank’s independence. The dispute could weigh on US assets if investors perceive that political pressure is undermining the Fed’s credibility.
Azar is Market Analyst at XTB MENA
