Dollar Edges Higher; Inflation Data in Focus By

Dollar Edges Higher; Inflation Data in Focus By

© Reuters.

By Peter Nurse — The dollar edged higher in early European trade Tuesday, but activity remains subdued ahead of this week’s key U.S. inflation release after Friday’s lackluster payrolls number.

At 2:55 AM ET (0755 GMT), the , which tracks the greenback against a basket of six other currencies, was up 0.2% at 90.093, not far above 89.533, a 4 1/2-month low touched late last month.

traded 0.1% lower at 1.2177, still above its three-week low of 1.2104 set on Friday, while gained 0.2% to 109.48, after Japan’s GDP contracted 1% quarter-on-quarter and 3.9% year-on-year for the first quarter of 2021. fell 0.2% to 1.4150 and the risk-sensitive was down 0.1% at 0.7745.

Friday’s U.S. release showed an increase of 559,000 jobs last month after a revised 278,000 gain in April, below the 650,000 gain expected. 

While this softer-than-expected release eased the immediate pressure on the Federal Reserve to rein in its ultra-easy monetary policies, there still remain concerns that the central bank will shortly start discussing tapering asset purchases given the high levels of inflation.

This view was reinforced by comments from U.S. Treasury Secretary over the weekend that higher interest rates, and higher inflation levels,  would be good for the economy.

With this in mind, investors are now looking to data on Thursday for fresh direction, one of the last major pieces of economic data ahead of the next Fed meeting on June 15-16.

“Remember, last month saw the dollar gently offered on a softer NFP, with the FX and Rates markets then looking through the spike in US CPI figures for April.  Will the same happen again this week? Will dollar bears survive what could be the peak headline CPI reading of the cycle, which could come in near 4.8-5.0% YoY,” asked analysts at ING, in a note.

Also on investors’ radar is Thursday’s policy decision by the , although the central bank is widely expected to keep in place its ultra-loose monetary policies.

Euro-area inflation is running at 2%, marginally above the ECB’s goal but a far cry from the levels seen across the Atlantic, and gross domestic product is seen growing 4.3%, only reaching its pre-crisis level next year.



Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a comment

Send a Comment

Your email address will not be published.

Enter text shown below: