USD: Further weaker US inflation data required to trigger a more sustained reversal lower – MUFG

The US Dollar sold off at the end of last week following the release of the weaker-than-expected US PCE deflator report for May. Economists at MUFG Bank analyze USD outlook. 

Softer US inflation takes the wind out of the USD’s sails 

At this stage, the softer US PCE deflator report has mainly put a dampener on upward momentum for the US yields and the US Dollar in the near term rather than triggering a more sustained reversal lower. 

Further weaker US inflation data will be required to trigger a more sustained reversal lower.