 Dollar's rebound is picking up momentum in early US session, bolstered by latest Employment Cost Index which rose by 1.2% in Q3, marking the fastest pace since Q3 2022. This unexpected acceleration in employment costs adds to a series of economic data that suggests the US economy remains hotter than preferred. Especially, persistently elevated services inflation and tight labor market are holding back Fed's plan for interest rate cuts. With this economic backdrop, Fed Chair Jerome Powell is expected to temper market expectations tomorrow about the feasibility of three rate cuts this year, reinforcing the notion that Fed would maintain a more cautious approach to monetary policy easing. Meanwhile, Euro also recovers slightly today, spurred by stronger than anticipated Q1 GDP growth combined with slower-than-expected decline in April's CPI core. While these developments are unlikely to disrupt ECB's tentative plans for June rate cut. The scenario of continued economic momentum and slowing disinflation would diminish the urgency for aggressive rate cuts by ECB, supporting a strategy of two rate reductions by the end of Q3 and Q4, respectively... |
