The inflation data for the United States will be known and the ECB and the Fed will make decisions about their monetary policies.
The dollar rose slightly this Monday as investors await inflation data from USA for the end of this week, where markets have priced in as almost certain a quarter-point rate cut by the Federal Reserve (Fed) next week, while awaiting consumer price data on Wednesday.
“The rise in unemployment that we saw in November really only cements the case for a 25 basis point cut,” said Michael Brown, senior research strategist at Pepperstoneto Reuters. “Unless we get a really high inflation number, but that’s certainly not the base case,” he added. “The Fed is much more focused at this moment on the labor market than on the evolution of inflation,” he stressed.
Data on Friday showed U.S. job growth rose in November, but a rise in the unemployment rate to 4.2% indicated a easing of the labor market that should allow the Fed to cut interest rates again.
He dollar index rose 0.179% and stood at 106.14, while the euro fell against the dollar to $1.0554, after previously falling as much as 0.3%, while the greenback gained 0.77% against the yen and stood at 151,235.
Brown expected upcoming U.S. inflation data, the U.S. monetary policy meeting European Central Bank (ECB) Thursday and the Fed’s rate decision next week will lead to subdued currency trading for now “given the amount of event risk we have on the horizon.”
The strategist of Mizuho BankVishnu Varathan, also pointed out a series of geopolitical events, such as the fall of the regime of Bashar al Assad in Syriaalong with macro transactions and related to the assumption of donald trumpwhich give markets greater impetus to hold long dollar positions.
He Australian dollar gained 0.82% against the greenback and the kiwi rose 0.58%, after China announce a change in monetary policy to stimulate growth. The two currencies often serve as a substitute for the chinese yuanwhich strengthened in the offshore market and left the dollar down 0.26% at 7.2670.
China will adopt an “appropriately loose” monetary policy next year as part of steps to support economic growth, implement a more proactive fiscal policy and step up countercyclical adjustments “unconventional,” state media reported Monday, citing a Politburo meeting.
Source: Ambito
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