US Core and Headline Inflation Diverge, Employment Costs Rise, US Dollar Nudges Higher.

US Dollar (DXY) Price, Chart, and Analysis

• Headline inflation at 4.2% vs a prior reading of 5.1%
• Core inflation at 4.6% vs 4.5% expectations and a upwardly revised prior reading of 4.7%

Core inflation in the US remained elevated, and sticky, in March, while headline inflation dropped the best part of 1 percent in March, leaving the overall picture mixed. Employment costs, both benefits, and wages, rose by 1.2% in March compared to 0.8% and 1% respectively in February. The overall take from today’s data suggests that the Federal Reserve will hike rates again next Wednesday by 25 basis points.

For all market-moving data releases and economic events see the real-time DailyFX Calendar.

While inflation remains entrenched in the US, data released yesterday shows growth slowing in the first quarter of 2023. Yesterday’s first look at US growth showed the economy expanding by just 1.1% in Q1 compared to market expectations of 2% and less than half the 2.6% expansion seen in Q4 2022. Next week’s Fed meeting may see hawks and doves resume their battle with data providing both sides with arguing points.

The US dollar moved slightly higher post-release and currently trades on either side of 101.60, its highest level of the week. From a technical perspective, the break above the 20-day simple moving average may suggest that the greenback can push higher although the 101.80-102.00 zone may prove difficult to break convincingly ahead of the weekend.

US Dollar Index Daily Price Chart – April 28, 2023

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.