Dollar cannot decide on direction in anticipation of economic data
2023.01.11 04:10
Dollar cannot decide on direction in anticipation of economic data
By Tiffany Smith
Budrigannews.com – On Wednesday saw little change in the value of the US dollar in Europe as investors focused on this week’s crucial U.S. inflation report despite a rising risk appetite.
The, which compares the dollar to a basket of six other currencies, edged up to 103.017 at 03:10 ET (08:10 GMT), remaining just above the week’s seven-month low.
Since September, when it reached a 20-year high, investors have begun to factor in the end of the Fed’s rate-hiking cycle as inflation eases. As a result, the dollar has been under pressure.
In a note, analysts at ING stated, “The market is growing increasingly confident that the Fed will end its tightening cycle this quarter and embark on an easing cycle in the third quarter.”
“The market does not subscribe to the Fed’s narrative that the funds rate will be kept at 5.00% for a long time,”
During a panel discussion in Sweden on Tuesday, the Fed Chair avoided providing any policy clues. With the economic calendar largely empty on Wednesday, the focus is squarely on Thursday’s U.S. CPI release.
This is anticipated to demonstrate that inflation eased further from the previous month, with the expected December reading of 6.5 percent, down from 7.1 percent. The core CPI figure, which does not include volatile prices for food and energy, is expected to be 5.7%, down from 6.0% in November.
In other markets, traded flat at 1.2155 and gained 0.2 percent to 132.44, both close to the seven-month high of 1.0760 reached in the previous session.
After rising this week to levels last seen in 1981, there is growing speculation that the central bank may further adjust its benchmark bond yield target when it meets next week.
a 0.1% decline to 6.7743, with the Chinese yuan hovering close to five-month highs on optimism regarding the country’s relaxation of most COVID restrictions.
The Chinese for December is due at the end of the week, and this should show how the economy is recovering now that travel restrictions have been eased for the last month of 2022.
More USD/JPY-inflation may bring the pair back
