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USD steady ahead of inflation data

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The Dollar held broadly steady on Wednesday ahead of a US inflation report later in the day, yet edged up against the Yen on a possible early end to Japan’s negative interest rate policy.


The greenback rose around 0.2% to 147.39 against the Yen, retracing its largest one-day rise in two months on Monday following comments from Bank of Japan governor Kazuo Ueda last weekend.


Even though the Dollar held broadly firm, moves were muted as traders awaited a US inflation reading on Wednesday.


The Dollar index, measuring the currency against six rivals – was steady at 104.61 after falling to a one-week low on Monday and registering its largest daily decline in two months, Reuters reports.


Analysts attributed the fall to an unwinding of long Dollar positions following a recent streak of resilient US economic data.


The US consumer price index (CPI) data for August out on Wednesday comes a week before the upcoming Federal Reserve meeting. Headline CPI is forecast to accelerate by 0.6% compared to 0.2% the month before and by 3.6% on a yearly basis.


Although the Fed is forecast to keep rates on hold at the meeting next week, the following move in November is more uncertain, according to CME’s FedWatch Tool.


“I think there is a chance for the Fed to raise interest rates another time this year,” according to Tina Teng, market analyst at CMC Markets.


Elsewhere, the Euro was trading flat at $1.0753. In the previous session, it reached a one-week top of $1.0777 as markets hiked bets on additional rate rises from the European Central Bank (ECB) ahead of its monetary policy decision.


“In recent months, European inflation, core inflation in particular, has fallen more slowly than expected. This has given the ECB some serious headaches,” said Rabobank analysts.


“The high inflation rate warrants another rate hike, but the economic indicators … signal that a recession is imminent.”


Furthermore, Sterling weakened against the Dollar and Euro on Wednesday following UK economic output contracting more than forecast in July.


The Pound fell 0.4% against the Dollar at $1.2449, whilst the Euro rose 0.2% against the Pound to 86.27 pence.

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Mauritius,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

Contact

Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.