US consumer prices, a key measure of inflation, slowed today, while retail sales disappointed.
The US dollar was hit by the data, falling 0.3 per cent to 99.323 against a basket of currencies.
Consumer prices rose by an annual rate of 2.2 per cent, down from 2.4 per cent up in March and below expectations of 2.3 per cent, according to the US Bureau of Labor Statistics.
Core prices, which excludes food and energy costs, increased 1.9 per cent year-on-year, down from two per cent in March. The rate was expected to be steady.
Meanwhile, retail sales rose 0.4 per cent month-on-month in April after an upwardly revised 0.1 per cent gain in March, but below the 0.6 per cent forecast, according to the Commerce Department. Sales were up 4.5 per cent in April on a year-on-year basis.
"The Fed were issued a reality check this afternoon as inflation and retail sales levels both disappointed, showing that whilst the US economy is front-running on a global scale, progress is not without stumbling blocks," said Alex Lydall, head of dealing at Foenix Partners.
Whilst the labour market continues to impress, if consumers are spending less and inflation levels are pulling back the Fed won’t be in a rush to hike rates again. Futures markets deduce the probability of a June hike around the 70 per cent mark but with Central Banks notably more cautious than the average market participant, June chances could start to level out more around the 50/50 level.