Kashkari out there again, suggesting the Fed isn't done with hikes if inflation doesn't cool faster, even with the recent employment cooling. It certainly keeps the dollar firm, which makes me continue to watch $USDMXN, currently at 17.47417, for any signs of a break if US yields push higher again.
It's always something with these Fed officials. Their signaling often seems more about managing expectations than reflecting actual data trends. Hard to make a clean play on USDMXN with that kind of noise.
It's hard to see how much more they can tighten without breaking something significant, though Kashkari has always leaned that way. The market seems to be pricing in some cuts later this year, which directly contradicts this hawkish rhetoric.
Yeah, it feels like they're in a tough spot, trying to balance inflation with not completely stifling growth. The dollar strength is definitely something to keep an eye on, especially with those emerging market pairs.
It's interesting how much Kashkari's comments seem to influence the market's perception of future rate moves. I wonder if the employment cooling we've seen isn't enough to sway the Fed more dovish, or if inflation really is the primary driver for them right now.
It's a tough spot for the Fed, balancing inflation control with employment. Kashkari's stance isn't surprising given the recent inflation prints, but it does put pressure on emerging market currencies like MXN if the dollar continues to strengthen.