Dollar Firms as CPI is ‘Benign’
May 15th, 2008 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar firmed a bit more against the euro. Late Wednesday, the euro was trading at $1.5459 vs. $1.5482 on Tuesday.
Traders were digesting the latest Labor Department stats on inflation, believers in which also favor the tooth fairy. Still, many take them seriously, and for those who do Labor said that the CPI came in at a tame 0.2%, below expectations, for April.
Something – though nothing that declined a lot in price last month comes quickly to mind – apparently offset the stunning 0.9% jump in food prices, the largest seen since 1990. Prices of food consumed in the home jumped 1.5%, also the largest gain in 18 years.
After offering a nice bridge for sale, Joel Naroff, president of Naroff Economic Advisors, suggested: “Watch out for the headline number in May as the full increase in gasoline will show up.”
If the May CPI soars, the Fed could feel forced to act. But for now, yesterday’s numbers report should mean reduced pressure on the Federal Reserve to quickly end its accommodative monetary policy.
Futures traders are pricing in an 8% chance the Fed will cut rates again, to 1.75%, in June. On the other hand, traders are giving even odds that the Fed will start raising rates by late October.
Source: Dollar Firms as CPI is ‘Benign’
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.