US yields spike after inflation report. Will the Fed cut rates in 2024?

Data current as of 4/10/2024

Key points

• 10YR Treasury yields hit 4.5%: (0:38)
• Fed interest rate cut unlikely for June: (1:28)
• CPI inflation rate 0.1% higher than expected: (3:03)
• Will the Fed cut rates this year?: (4:49)
• US dollar hits 30-year high vs the yen: (6:47)

10YR Treasury yields hit 4.5%

U.S. Treasury yields on the benchmark 10-year note have reached their peak levels for the year at 4.5%. This surge reflects growing investor confidence and anticipation of tighter monetary policy, influencing forex markets by potentially strengthening the US dollar against other currencies.

Fed interest rate cut unlikely for June

The likelihood of the Federal Open Market Committee (FOMC) slashing interest rates in June diminished dramatically this week, plunging from 60% to 20% following the April CPI report. With out a rate cut in June, the Fed's anticipated 3 cuts in 2024 begins to look unlikely as well. This adjustment in expectations affects forex trading strategies, as the prospect of higher rates typically bolsters the dollar's value.

CPI inflation rate 0.1% higher than expected

The March CPI inflation rates for both core and headline categories exceeded predictions by 0.1%, registering at 3.8% and 3.5% respectively. Even a marginal increase in inflation can signal persistent economic heat, prompting traders to consider the implications for the Federal Reserve’s rate decisions and, consequently, forex trading opportunities.

Will the Fed cut rates this year?

Now the probability that the Federal Reserve will not lower interest rates at all this calendar year has grown to 13.5%, up significantly from 1.3% the previous week (CME FedWatch tool). Such uncertain expectations around interest rate movements create a volatile forex trading environment, impacting currency pairs, especially those involving the USD.

US dollar hits 30-year high vs the yen

The USD/JPY pair has soared, now edging close to 153.00 after surpassing the 152.00 mark for the first time since 1990. This remarkable achievement underscores the US dollar's enduring strength and offers forex traders critical insights into potential future movements against the Japanese yen.

How to trade US dollar

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex broker like tastyfx. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.