US inflation expectations stabilize near one-week high ahead of CPI data

US inflation expectations, as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data, justify the market’s indecision as the numbers fade the week-start recovery moves ahead of the all-important US Consumer Price Index (CPI) for April.

It’s worth noting that the 10-year and 5-year inflation precursors remained steady near 2.23% and 2.22% on Tuesday, repeating Monday’s figures at the highest levels in a week.

With this, the market’s expectations of softer prints of the CPI ex Food and Energy, also known as the Core inflation data, gain acceptance and weigh on the US Dollar Index (DXY) price. That said, the greenback’s gauge versus the six major currencies snap a two-day rebound near 101.50 by the press time.

Meanwhile, US CPI forecasts suggest mostly unchanged CPI YoY and an improvement in the monthly figure. Should the data suggest escalating inflation pressure in the world’s biggest economy, the recently hawkish Fed bets may gain momentum and can allow the US Dollar to pare intraday losses.

Also read: US April CPI Preview: How will inflation data influence Fed rate outlook?