The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data.

The US consumer price index rose 0.3 in April after 1.2 a month earlier. The annual inflation rate slowed from 8.5 to 8.3 but was higher than the expected 8.1 yy. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6 mm and 6.2 yy last month, higher than the expected 0.4 and 6.0, continuing the sprawl of inflation.

While the annual rate of core and core inflation seems to have peaked, higherthanexpected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2 target, the Fed will be inclined to act faster raise rates more than 50 points at a time or stop hiking at a higher level.

Locally, we see a tugofwar around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this weeks extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021.

The SP500 and Nasdaq futures were also pushed back to this weeks lows, indicating continued bearish pressure.

Source FXPro