The greenback recouped some of its previous losses following the publication of FOMC minutes
The Buba report showed that German wages rose at the fastest pace for almost a decade. Collectively agreed wages grew from 3.6% in the previous quarter to 6.2% in Q1 2024. The report indicates that labour shortages coupled with a high willingness to strike have given more power to labour unions and this could further influence wage higher. A continued wage growth could be a setback for consecutive rate cuts by the ECB. The latter has often highlighted that high wage growth is one of the main factors that makes their job in fighting high price level challenging. Meanwhile, candidates are getting ready for the European elections due from 6 to 9 June 2024 and a live debate is being organised today between the main candidates. These elections are a major political event as it will determine the direction of the future of the European Union. But in reality, they are a favourable breeding ground for the fringes, that is right-wing and left-wing parties. The former fighting to cut immigration and interestingly against the very existence of the EU, while the later defend mostly social and climate agenda. Today, the economic calendar features flash manufacturing and services PMI for France, German and the Eurozone. The fibre is currently trading at 1.0830, weighed down by hawkish Fed minutes.
The minutes of the last FOMC highlight the continued focus of the Fed on bringing inflation within the 2% target range. Overall, committee members agreed that monetary policy is rightly geared to reach this goal with some even of the view that interest rates should be raised. Recent inflation data indicating little progress in bringing inflation down suggests that tight policy shall be maintained in the near term. The market shall be turning its gaze towards US PMI today, especially for the services and manufacturing sectors. Other data due during the US trading session include new home sales the Kansas Fed manufacturing index and initial as well as continuing jobless claims. Atlanta Fed president Raphael Bostic will be speaking about macroeconomics with Stanford MBA students today. The greenback recouped some of its previous losses following the release of FOMC minutes and it was trading at 104.90 against peers at the time of writing.