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13/08/24
53
USD Lower Ahead of US CPI Data
On Tuesday the US dollar eased against its peers in calmer trading, as markets waited for U.S. inflation data that may provide clues about the outlook for Federal Reserve interest rate cuts.
The dollar started easing after the release of data showing that the U.S. PPI in July increased by less than expected as an increase in the cost of goods was balanced by cheaper services, indicating that inflation is still moderating.
Currency markets have been in turmoil since a sharp rally in the yen in July that has been driven by the unwinding of an investment strategy known as the carry trade and contributed to stocks sliding.
The dollar was however softer versus the yen on Tuesday at 146.98, in an indication that markets seem to be over the worst of the recent turmoil.
In July the yen slipped to 38-year lows as investors moved into the carry trade. This entails borrowing yen in Japan at low interest rates and then selling it for other currencies to buy assets with higher yields elsewhere.
Investors are now waiting for the closely watched consumer price index report due to be released on Wednesday, which will also help guide the Fed’s policy on interest rates.
The dollar index dropped to 102.92, and the euro was 0.22% higher at $1.0957.
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