Dollar continues to retreat after CPI; Sterling edges higher post GDP

Dollar continues to retreat after CPI; Sterling edges higher post GDP
Dollar continues to retreat after CPI; Sterling edges higher post GDP
© Reuters.

By Peter Nurse – The U.S. dollar weakened in early European trade Friday, continuing the previous session’s selloff after U.S. inflation eased more than expected, while sterling edged higher after a small third-quarter growth contraction.

At 02:50 ET (07:50 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.5% lower at 107.50, dropping to the lowest levels since mid-September after losses of more than 2% in the prior session.

This bout of dollar weakness has stemmed from Thursday’s data showing grew 7.7% in October, its slowest pace in nine months, suggesting the series of sharp interest rate hikes by the this year were finally having their desired effect.

This raised expectations that the Fed policymakers may decide to temper the central bank’s aggressive monetary tightening campaign earlier than previously anticipated, by only 50 basis points in December instead of another 75 bps increase.

The “CPI data will not be the final say on that decision (we have jobs data and another CPI release before then), but it can set the tone regarding the Fed’s comfort level,” said analysts at ING, in a note.

Elsewhere, rose 0.3% to 1.1747 after data showed shrank by 0.2% in the three months to September, not as deep a contraction as the 0.5% drop expected.

However, this was the in six quarters and is expected to represent the start of a lengthy slowdown, with the Bank of England indicating last week that Britain’s economy was set to go into a two-year recession if interest rates continued to rise to combat inflation.

rose 0.3% to 1.0242, climbing to its highest level since August and extending its 2% overnight surge, while the risk-sensitive rose 0.5% to 0.6653.

rose 0.2% to 141.25, gaining back some ground after the dollar recorded on Thursday its worst day against the Japanese yen since 2016, having fallen 3.7%.

slumped 1.1% to 7.1069, with the yuan climbing to its strongest level against the dollar in two weeks after China reduced the amount of time people entering the country must spend in quarantine to five days from seven.

This followed news that Hong Kong had relaxed some of its COVID curbs, and spurred renewed speculation that China may look more carefully at its Zero-COVID policy.

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance