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12/08/24
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USD Inches Up Before Key CPI Release
On Monday, the U.S. dollar inched up in calm trading as traders looked to the release of key inflation data later this week for cues on future Federal Reserve monetary policy moves.
The U.S. dollar index, which measures its strength against 6 other major currencies, traded up 0.1% at 103.017, steady after the wild swings seen last week.
Late last week the dollar was boosted by better-than-expected weekly U.S. jobs data that led to traders paring bets for Federal Reserve interest rate cuts later in the year.
The dollar battled at the beginning of the week, driven by fears about the Bank of Japan’s hawkishness and the U.S. economy.
Fed fund futures imply a 49% probability of a 0.5% rate cut in Sept., after rising as high as 100% at some stage last week.
That uncertainty left markets highly vulnerable to events and data, with Wednesday’s U.S. consumer price index looming large.
It is expected July CPI data will show that inflation continued to inch closer to the Fed’s annual target of 2%, with forecasts expecting annual core inflation to fall to 3.2%, the lowest since April 2021.
Analysts at ING said in a note July PPI data and CPI data would likely provide confidence to the Fed that inflation was under control.
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