US inflation expectations retreat from two-week top

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, fade the gradual recovery from September lows tested on January 20, per the FRED website.

In doing so, the inflation gauge eases from the highest level in a fortnight to 2.43% by the end of Tuesday’s North American session.

The easing in inflation expectations could be combined with the recently mixed signals from the Fed to justify the US dollar’s latest weakness. That said, the market’s shift in attention from the Fed ahead of Friday’s US jobs report could also be considered as weighing on the US dollar prices.

However, firmer US ISM Manufacturing PMI for January, 57.6 versus 57.5 expected, joins the Fed’s hawkish halt test the greenback bears.

Moving on, Fedspeak and risk catalysts are important to determine short-term market moves ahead of the US employment report for January.

Read: The US employment report may lose some of its market-moving ability