Focus on the Impact of Fed Meeting Minutes and CPI on the Dollar Index

Market volatility has intensified, with heightened attention on the Non-Farm Payrolls report. Current inflation data and the latest Fed meeting minutes are in focus, as gold prices continue to rise and the Dow Jones Industrial Average records its worst performance of the year. Close attention is being paid to the decline in inflation and the fluctuations in the dollar's movement, which are impacting current U.S. stock trading prices.

Last week, market volatility increased amid heightened focus on the Non-Farm Payrolls report, escalating tensions in the Middle East, and frequent remarks from Fed officials. Gold prices continued to climb, while the Dow Jones suffered its worst weekly decline this year, and the dollar remained under pressure. This week, the European Central Bank, Bank of Canada, and Reserve Bank of New Zealand will announce interest rate decisions, with the ECB potentially hinting at a rate cut in June. The dollar's trajectory will be influenced by U.S. CPI data and the Fed meeting minutes.

This week’s key focus is on the CPI inflation data and the latest Fed meeting minutes, both due on Wednesday. While overall inflation is expected to rise, core inflation is anticipated to decline. The minutes will reveal FOMC officials’ discussions on economic growth and inflation expectations. Although no groundbreaking information is expected, they will provide valuable insights for the market.

March CPI is projected to increase to 3.4% from the previous 3.2%. However, core inflation is expected to drop to 3.7%. The core data excludes energy prices, and this discrepancy may reflect rising oil prices during the month.

Overall, the U.S. economy demonstrates stronger fundamentals than most regions. For instance, according to the Atlanta Fed, GDP growth for this quarter is expected to reach 2.5%. Thus, the dollar’s overall outlook appears positive, but sustained gains may require more signs of weakness in foreign economies or a risk-off sentiment boosting demand for safe-haven assets.

The Reserve Bank of New Zealand will also announce its interest rate decision on Wednesday. The New Zealand dollar has been under pressure this year, depreciating over 4% against the U.S. dollar. At the end of last year, New Zealand’s economy entered a mild technical recession, weighing on consumer and business confidence. However, inflation remains elevated, so the market expects the RBNZ to take no action at Wednesday’s meeting.

Attention should be paid to the anticipated decline in inflation, the Fed’s response to mixed economic reports, and the trend of inflation data, while closely monitoring the impact of Fed policies on the dollar’s movement.