The euro has been capitating off the weaker than expected US CPI earlier this week despite weakening slightly both yesterday and today. Markets are seemingly expecting the Federal Reserve to have reached its hiking cycle peak and have since ‘dovishly’ repriced expectations through to December 2024. This may be an overreaction as inflation remains sticky and after Fed Chair Jerome Powell’s recent comments to maintain elevated interest rates, the roughly 91bps of cumulative rate cuts by the end of 2024 could be amplified. US PPI did encourage further disinflation being a leading indicator but Fed officials stay cautious.
