Dollar Weakens Ahead of U.S. Inflation Report, Speeches from Central Bankers

dollarThe dollar is pulling back against the euro on Friday ahead of a closely watched U.S. inflation report released later in the morning that is expected to show weak inflation pressure in April, combined with growing expectations that the Federal Reserve will wait until the end of 2015 before raising interest rates.

The inflation reading on Friday is measured through the Consumer Price Index (CPI), the most widely watched and used measurement of the U.S. inflation rate that determines the real gross domestic product (GDP) and sets future expenditure for governments. estimates a 0.00 percent CPI inflation in April, lower than the 0.2 percent increase in March.

Core CPI is expected to increase by 0.2 percent in April, matching the 0.2 percent in March when oil prices were falling internationally.

Fed Chair Janet Yellen and ECB President Mario Draghi will be giving speeches on Friday as investors pay close attention to the central banker’s thinking about the state of the economy and monetary stimulus.

Recent minutes from the Fed’s April meeting on Wednesday revealed that Federal Reserve committee members still believe that it would be early to raise interest rates during the next Fed meeting in June, although most believe that the U.S. economy is recovering from the first quarter of 2015 which saw only 0.2 percent economic growth.

Weaker than expected U.S. economic data on Thursday in manufacturing and existing home sales, which saw a 3.3 percent decline in April, is also helping to drive the dollar lower on Friday ahead of the inflation report.

-Johnathan Schweitzer

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