Dollar is holding on to chances of strengthening are small
2023.01.11 05:06
Dollar is holding on to chances of strengthening are small
By Tiffany Smith
Budrigannews.com – On Wednesday, traders waited for this week’s U.S. consumer price data to see if it would show that inflation is falling. The U.S. dollar held its ground as a result.
The European Central Bank published an article arguing that “very strong” wage pressures are likely over the next few quarters, and as a result, the euro fell against the dollar. A policymaker at the ECB stated that the cycle of interest rate increases was coming to an end.
Mario Centeno, a member of the ECB’s governing council, stated on Tuesday that he expected inflation to fall again in March and that the monetary tightening process was nearing its end. This came as traders awaited U.S. inflation data to help firm up expectations for a Federal Reserve interest rate hike.
The euro was flat at $1.0733, its highest level against the dollar in seven months.
Chris Turner, head of currency strategy at ING, stated, “Euro/dollar remains gently bid, buoyed by expectations of a Fed U-turn in the second half of this year, China reopening and a belatedly hawkish ECB.”
Since reaching a 20-year high in September, investors have begun to anticipate easing inflation and a softer dollar as the need for additional interest rate hikes diminishes. As a result, the dollar has lost almost 12 percent against the euro.
However, the euro has struggled to advance further over the past month or so, and traders have been cautious in selling dollars while the global economic outlook is bleak and the U.S. Fed continues to promise hikes.
Investors are keenly focused on U.S. CPI data, as Fed Chair Jerome Powell did not provide any policy clues during a panel discussion in Stockholm on Tuesday. Other Fed officials have stated that their subsequent actions will be data-dependent.
According to Commonwealth Bank of Australia (OTC:), “Another downward surprise to the core CPI would cement the deceleration trend.” Joe Capurso, a strategist, stated.
“Another soft core CPI would encourage markets to continue shifting pricing for the (Fed’s) February meeting from a 50 basis point increase to a 25 basis point increase, which would cause the U.S. dollar to ease further.”
Although futures pricing has been volatile, it suggests that markets now favor a 3/4 chance of a quarter-point increase next month.
To 103.42 against a basket of currencies, the gained 0.15 percent.
Asia’s currencies have risen against the dollar as a result of China’s reopening.
was just a hair below a five-month high on Wednesday, 6.7737.
In anticipation of increased tourism as China’s borders open, the Singapore dollar and the Thai baht reached nine-month highs this week.
After data showed that the annual rate of inflation increased to 7.3% in November, leaving room for additional rate hikes, the Australian dollar gained about 1% to $0.6900 Aud.
More Dollar cannot decide on direction in anticipation of economic data
