Fed's Barkin and Daly comment on inflation

Barkin and Daly were the first Fed members to deliver speeches following release of US CPI data for March, and therefore they could be the first ones to offer potential hints on what Fed will do in early-May when it meets to decide on rates. Majority of key US data scheduled for before the decision has already been released.

Barkin

• Weakening in demand can be spotted. It is too early to declare victory over inflation

• Today's CPI data was in-line with expectations

• PCE and labor costs that will also be important for next FOMC decision

Daly

• Future rate hikes may not be needed

• One should not expect Fed to deliver rate hikes at every meeting

• Does not want to forecast when rate hike cycle will end

• Recession will most likely be avoided

• Today's CPI report was good news

• Inflation expectations are anchored allowing Fed to take a couple of years to bring down inflation

Unfortunately, remarks from the two were inconclusive. On one hand, they suggest that next rate hike in the United States is uncertain. However, they also suggest that should Fed decide to hold rates unchanged, it does not mean that rate hike cycle is over. EURUSD continues to trade at elevated levels near 1.10 mark while US500 and other Wall Street indices trimmed all of the post-CPI gains and are now trading little changed compared to pre-CPI levels.

US500 barely saw any reaction to comments from Barkin or Daly. Index erased post-CPI gains as an attempt to break above the resistance zone ranging between 50% retracement and 4,165 pts mark failed. Source: xStation5