MAJOR DXY RISK EVENTS

[MongiIG]

MAJOR DXY RISK EVENTS

Today we received better than expected GDP data out of the euro zone (Euro has the largest weighting in the dollar index) which has had a limited effect on the EUR/USD pair and the index as markets adopt a wait and see approach ahead of tomorrow’s ECB rate decision. Friday we see inflation data out of the US which is unlikely to have a significant impact on DXY even if inflation prints lower or in line with expectations as Jerome Powell mentioned the Fed is not looking for nuanced inflation data as a reason to slow the current trajectory of rate hikes.

Into next week we have ZEW sentiment and US PPI data before the all important FOMC meeting and retail sales data. Markets and a number of FOMC members favor a 50 bps hike for June and July but retail sales will watched fairly closely after Walmart and Target issued warnings around the strength of the consumer in their respective Q1 earnings reports. In addition, both stores have mentioned growing inventory supplies as concern for future profitability as consumers tighten their belts amid rising inflation.

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--- Written by Richard Snow for DailyFX.com