Flash PMI figures across the U.S., the UK and the euro zone are due later in the day and will provide further clarity on their respective manufacturing and service sectors
The dollar held broadly steady on Thursday as traders awaited a slew of business activity surveys to gauge the health of major economies and what that may mean for the global interest rate outlook.
Flash PMI figures across the U.S., the UK and the euro zone are due later in the day and will provide further clarity on their respective manufacturing and service sectors.
The dollar rose against the yen and was back above the 150 level to trade at 150.34 yen.
A glance at the composite PMIs for the U.S., Europe and the UK show that they are either expanding at a faster pace or slowing at a diminishing rate, noted Matt Simpson, senior market analyst at City Index.
That warns of upside pressure for growth and inflation – which ties back into the ‘higher-for-longer’ narrative that traders do not want to hear, he added.
Policymakers, especially from the Fed and the ECB, have been steadfastly pushing back against market expectations for a slew of global rate cuts this year, citing lingering inflationary pressures and the risk of cutting rates prematurely.
Minutes of the Federal Reserve’s latest policy meeting released on Wednesday reinforced the message that the central bank is in no hurry to deliver on rate cuts that officials still expect to begin sometime this year.
Traders are currently pricing in just around a 30% probability that the Fed could begin cutting rates in May, much lower than a more than 80% probability a month ago, per the CME FedWatch Tool.
The adjustment in rate expectations has come of the back of recent data which showed U.S. producer prices and consumer prices increasing more than expected in January, alongside persistent strength in the country’s labour market.
