Dollar falls broadly today and stays weak as markets enter into US session. The underlying cause of this sell-off remains somewhat ambiguous, as there were no significant economic data releases to directly attribute the currency's selloff. The slight retreat in treasury yields, specifically the 10-year yield just gyrating between 4.35-4.40, appears insufficient to solely account for the Dollar's dip. Additionally, market sentiment does not clearly lean towards risk-on, evidenced by European indexes trading in the red while US futures saw marginal rises. This situation raises questions about whether traders are preemptively betting on the anticipated US CPI data set for release tomorrow.
Dollar saw only a temporary uplift from stronger-than-expected CPI figures from the US. The greenback reverted to pre-release levels, while stock futures rebounded. Traders appeared to be refraining from taking decisive bets. This reaction suggests that the inflation data, despite being higher than anticipated, may not be sufficiently influential to deter Fed from cutting interest rate in June. The core inflation rate's modest cooling, alongside perceptions of energy driven headline inflation rise as "transitory," has seemingly tempered immediate concerns over persistent inflationary pressures.