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Market Watch: Dollar Slips as Inflation Expectations Remain Steady

inflation expectations

Global markets are steady amid unchanged inflation expectations, a minor dollar dip, and rebounding crude oil prices.

The New York Federal Reserve’s report on 1-year consumer inflation expectations holding steady at 3% for March has echoed across global markets, influencing trading sentiment during the Asia session. Despite recent “hot” inflation data in the United States, expectations have remained anchored around the 3% mark since December, indicating a degree of stability amidst economic fluctuations.

In overnight trading, the dollar index (DXY) experienced a minor dip, sliding from 104.40 to 104.10, while gold prices found support above $2,320/oz and climbed towards $2,350/oz. Crude oil prices rebounded despite easing tensions in the Middle East, with WTI oil bouncing from $85.70 to an overnight high of $87.35 per barrel.

Market Watch: Dollar Slips as Inflation Expectations Remain Steady

Asia Session Outlook

The Asia session anticipates relatively subdued trading activity with no significant news events scheduled. The DXY edged higher, nearing 104.20, while gold hovered around $2,340/oz. Investors expect market activity to increase as European markets open later in the day.

Central Bank Highlights

Federal Reserve (USD)

The Federal Funds Rate target range remained unchanged at 5.25% to 5.50%, with the Committee maintaining a cautious stance on inflation risks despite recent economic expansion.

Reserve Bank of Australia (AUD)

The RBA maintained the cash rate target at 4.35%, citing ongoing uncertainties in the economic outlook and the need for sustained inflation moderation.

Bank of Japan (JPY)

Amidst yen devaluation concerns, the Bank of Japan emphasized its commitment to maintaining monetary policy stability while observing gradual economic recovery.

Currency Market Trends

Australian Dollar (AUD): The Aussie displayed resilience, rebounding strongly against the dollar to trade around 0.6600. Key resistance and support levels are 0.6615 and 0.6560, respectively.

New Zealand Dollar (NZD): The Kiwi saw modest gains, increasing to trade around 0.6035. Resistance and support levels are at 0.6050 and 0.6000, respectively.

Euro (EUR): Despite recent dollar weakness, the Euro rebounded, trading around 1.0863, with resistance and support levels at 1.0870 and 1.0810, respectively.

Swiss Franc (CHF): The Swiss Franc remained relatively stable following SNB Chairman Thomas Jordan’s remarks on digital currency initiatives, trading around 0.9050 against the dollar.

British Pound (GBP): Supported by dollar weakness, the Pound climbed to around 1.2650, with resistance and support levels at 1.2670 and 1.2610, respectively.

Canadian Dollar (CAD): Elevated crude oil prices bolstered the Loonie, with USD/CAD falling to 1.3580, with resistance and support levels at 1.3610 and 1.3560, respectively.

Oil Market Dynamics

Crude oil prices rebounded despite geopolitical developments, with WTI oil trading around $86.80 per barrel. Anticipation surrounds the API Crude Oil Stock report later today, with potential drawdowns signaling increased demand and further supporting prices.

Market sentiments remain cautious amidst ongoing economic uncertainties, with investors closely monitoring central bank policies and geopolitical developments for potential market shifts.

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