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Implied probabilities for rate cuts this year plunged following today's US CPI report. There are now 94 bps in cuts priced in for the calendar year compared to 111 before the data.
A May cut has fallen to just 40% from +70% yesterday while a cut at the June 12 meeting is still fully priced in, albeit barely.
The result is a sizzling US dollar across the board with USD/JPY up 100 pips since the data to 150.37 and similar-sized USD moves elsewhere.
