The dollar registers two-month lows this Wednesday in Europe awaiting a crucial report from us inflation, while the pound sterling records new 15-month highs on expectations of further rate hikes in the UK.
The dollar index, which tracks the dollar against a basket of six other major currencies, is down nearly 1% to 100.573, hitting new two-month lows extending losses posted since the start of the week after several members of the fed indicated that the central bank was nearing the end of its monetary policy tightening cycle.
Why the CPI will be key for the dollar
The 25 basis point interest rate hike from the Federal Reserve meeting later this month is almost a given, but the report from the inflation to consumption in the United States, which is published this Wednesday, could help determine how many more rises are possible.
The consumer price index is expected to rise 3.1% in June, after rising 4% in May, which would mark the slowest annual increase since March 2021, up 0.3% per month. Everything indicates that the core annual rate will fall from 5.3% to 5%, falling for the third consecutive month.
“Our economist expects a core reading of 0.3%m/m, which should continue to provide encouraging news on disinflation, though still not altering the Fed’s narrative or convincing markets to stop taking a rate hike for granted.” July,” ING analysts say in a note.
Pound hits new 15-month highs
The GBP/USD pair is aiming for a 0.1% rise to the 1.2945 level, just below fresh 15-month highs recorded at 1.2970 at the start of the session, as traders wait for more gains from the interest rates by the Bank of England, outpacing inflation of United Kingdom that of all other major economies.
UK wages have risen at the fastest pace ever recorded, data showed on Tuesday, adding to the pressure on the bank of england to act, while its financial stability report, released early on Wednesday, said the country’s banks are “strong enough” to face the risk of a growing mortgage rate crisis.
The EUR/USD pair is aiming for a 0.2% rise to the 1.1025 level, just below its two-month high, and weak inflation data from Spain has not dented expectations for further interest rate hikes by the European Central Bank.
The Bank of Canada will raise rates again
USD/CAD is down 0.1% to 1.3224 ahead of the Bank of Canada meeting’s monetary policy decision, which is expected to result in a second straight rate hike. quarter point interest.
In June, the central bank raised its overnight interest rate to 4.75%, after a five-month pause, claiming that monetary policy was not tight enough given inflationary pressures.
The USD/JPY pair is down 0.6% to the 139.58 level and is likely to post a fifth day of gains, the longest winning streak in about seven months, as the performance of the Treasury bond American backs off.
AUD/USD is up 0.1% to 0.6693, while NZD/USD is up 0.1% to 0.6205 after the Reserve Bank of New Zealand decided to keep rates unchanged, as expected.
Source: Ambito
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