Market Updates – May 28

Federica D’Ambrosio

Senior Trader and CFO

US Dollar Index Maintains Two-Month Highs after FOMC Meeting

The minutes meeting released by the Federal Open Market Committee (FOMC) had a limited impact on financial markets. The document revealed a division among officials regarding support for more interest rate hikes. However, they unanimously agreed that inflation remained “unacceptably high,” and there were concerns about a “mild recession” later in the year.

Following the release of the minutes, the US Dollar Index maintained two-month highs, hovering just below 104.00. The dollar strengthened against a basket of currencies, benefiting from positive indicators of a resilient US economy. Nevertheless, uncertainty surrounding US debt ceiling negotiations prompted investors to seek safe-haven assets. Market expectations for a rate hike at the Fed’s next meeting in June increased slightly after the release of the May meeting minutes. While some Fed officials acknowledged that the need for further rate increases had become less certain, others emphasized the importance of keeping options open due to persistent inflation risks.

Revisions to first-quarter economic data on Thursday revealed stronger-than-expected economic growth, despite higher-than-initially-noted inflation.

The UK’s inflation rate remained stubbornly high, with consumer prices rising 8.7% in April, though down from 10.1% in March. This places Britain among the advanced economies with the highest inflation rates. The likelihood of additional interest rate hikes increased, causing a plunge in British government bond prices.

In Germany, revised figures indicated a contraction in the first quarter, raising concerns about a sustained recession. Weak consumer and industrial activity contributed to two consecutive quarterly declines in gross domestic product (GDP), meeting the technical definition of a recession.

On Friday, the Personal Consumption Expenditures (PCE) rose by 0.4% on a monthly basis, pushing the annual rate to 4.4% from the previous 4.2%. Additionally, Core PCE, the Fed’s preferred inflation gauge, increased by 0.4% monthly and 4.7% annually, slightly surpassing the anticipated 4.6%.

These recent economic developments have shaped financial markets, highlighting the ongoing challenges of inflation, interest rates, and economic growth.

High Impact News This Week: May 29 – June 2

Please remember to close the exposure in the directly associated pair to the news event. The exposure must be cleared 1 hour before the event and the position can be opened again from 30 min after the data has been released, in case of a speech positions can be reopened after the speech is over. 


10:00 AM BST   EUR  Consumer Price Index

12:30 PM BST   EUR  ECB Monetary Policy


01:30 PM BST   USD  Non Farm Payroll

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