The Federal Reserve’s Beige Book, an analysis of economic activity in the US, showed that most districts had “modest or moderate expansion” while consumer prices “remained generally stable.” Many areas reported little or no growth in lending and continued weakening in residential real estate, while manufacturing was widely “slow.” Nevertheless, tightness in the labor market helped keep retail sales “generally positive.”
Overall, the report reaffirms much of what we already know about the status of the economy, though the reports on consumer prices should help quell fears that inflation is running rampant. Furthermore, the analysis makes it clear that the Federal Reserve has little reason to hike this year, and if anything, their bias could be perceived as neutrally dovish.
The dollar has strengthened very slightly against the euro and pound, but should not give impetus to any major moves for the respective pairs, especially ahead of US GDP on Friday.