USDJPY 10 mins
The US dollar is moderately lower today as the market sorts through another week of data and Fedspeak.
We heard from Fed Governor Waller in Asia-Pacific trading and he was candid as usual. He said the recent CPI report was a reminder that progress on inflation was not assured but once again emphasized seasonal factors as the likely driver. Waller said more data is needed to see if it’s more signal that noise.
The Fed Governor said he still expects to ease policy this year and that several indicators suggest some slowing in growth. He wants to see “a couple more months” of inflation data to be sure January was a fluke.
The ‘couple’ commentary was also used by the Fed’s Harker who said,
“I think we’re close. Just give us a couple [of] meetings,”
The market is currently pricing in an 80% chance of a cut in June and 81 bps in cuts this year. That’s basically in-line with the Fed’s dot plot showing 75 bps in cuts this year.
I don’t see the comments today as a significant departure from previous commentary but they put the focus on economic data and are a reminder that the Fed will cut rates if/when economic data turns lower.