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TD Securities' US macro team, led by Oscar Munoz, analyzed the latest core CPI data and tariff pass-through trends, noting that while both showed softer-than-expected outcomes, the Federal Reserve is unlikely to pivot toward aggressive rate cuts. The team emphasizes that the Fed’s patience remains intact, with only two rate cuts still projected for the year. This assessment counters market speculation that softer inflation data might signal an imminent dovish shift.
For forex traders, this news reinforces the importance of monitoring Fed policy signals and inflation data. A delayed rate cut timeline could stabilize the USD in the short term, as markets may avoid overreacting to mixed economic indicators. However, persistent inflationary pressures or unexpected data could still force a policy reversal.
Looking ahead, traders should watch upcoming employment reports and inflation data for clarity on the Fed’s trajectory. The TD team’s cautious stance suggests that the USD may remain resilient against safe-haven currencies like JPY or CHF until more definitive policy signals emerge.
