US inflation expectations refresh five-month low ahead of Fed’s preferred price index

US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, drop for the third consecutive day by the end of Wednesday’s North American session. In doing so, the inflation gauge slumped to the lowest since January while flashing 2.36% level at the latest.

It’s worth noting that the one-month consumer inflation expectations, as per the data from the US Conference Board jumped to 8.0% versus 7.5%.

Given recent easing in the longer-term inflation expectations, the US dollar may find it difficult to extend the north-run. However, escalating fears of global economic slowdown, coupled with the hawkish Fedspeak, hints at the market’s rush towards the greenback.

That said, the US Dollar Index (DXY) refreshed its two-week top the previous day while piercing the 105.00 level.

Moving on, the Fed’s preferred version of inflation, namely the Core PCE Price Index, for May, expected to rise to 0.4% from 0.3% MoM, will be important to watch for clear directions.

Also read: US PCE Inflation May Preview: Inflation becomes moot