The dollar index (DXY00) Wednesday fell by -0.57%. The dollar retreated Wednesday after the US May CPI rose less than expected, boosting expectations for Fed easing later this year. Also, Wednesday’s rally in the S&P 500 to a new record high reduced liquidity demand for the dollar. The dollar recovered from its worst levels Wednesday after the FOMC projected only 25 bp of rate cuts this year compared to 75 bp of rate cuts back in March.
US May CPI unexpectedly eased to +3.3% y/y from +3.4% y/y in Apr versus expectations of no change at +3.4% y/y. May CPI ex-food and energy eased to a 3-year low of +3.4% y/y, weaker than expectations of +3.5% y/y.
