Dollar Edges Lower; Key U.S. CPI Release to Set Tone

Dollar Edges Lower; Key U.S. CPI Release to Set Tone
Dollar Edges Lower; Key U.S. CPI Release to Set Tone
© Reuters

By Peter Nurse

Investing.com – The U.S. dollar edged lower in early European trade Tuesday ahead of the release of the hotly anticipated U.S. inflation data, which is likely to set the tone ahead of next week’s Federal Reserve meeting.

At 03:05 ET (07:05 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.3% lower to 107.803, continuing its pullback from the 20-year high of 110.79 seen last week. 

All eyes Tuesday will be on the release of the August U.S. consumer price index at 08:30 ET (12:30 GMT), which will be the last significant guide of the country’s inflationary pressures ahead of next week’s Fed policy-setting meeting.

Analysts expect the to be 8.1%, which would be down from 8.5% in July, with gasoline prices having fallen nearly 10% since last month. On a , the outlook is for inflation to fall 0.1%, where it was flat the prior month.

The market will be looking at not just the headline number but the that strips out food and fuel to see what the month-to-month trend is. 

“It will take some surprising numbers to make the Fed deviate from a third consecutive 75bp rate hike,” analysts at ING said, in a note. “After all, the economy is posting decent growth, creating jobs in significant numbers, and Fed Chair Jerome Powell is arguing that ‘we need to act now, forthrightly, strongly as we have been doing and we have to keep at it until the job is done’.”

The markets are currently factoring in roughly a 90% chance that the Federal Reserve lifts its benchmark interest rate by 75 basis points at next week’s meeting.

Elsewhere, rose 0.2% to 1.0139, with the euro continuing to benefit from last week’s jumbo rate hike by the European Central Bank and the associated hawkish comments by a number of officials, including the influential Deutsche Bundesbank President Joachim Nagel, pointing to further rate increases this year.

remained elevated in August at 7.9% on the year, data released earlier Tuesday showed, and this is expected to result in a very weak , later in the session.

rose 0.3% to 1.1708, continuing the steep gains seen overnight, despite employment growth in the U.K. slowing sharply in the three months through July.

The Office for National Statistics said only 40,000 were created in the period, down from 160,000 in the three months through June. Even so, the fell to 3.6% of the population, its lowest in nearly 50 years, because of the number of people leaving the workforce altogether.

fell 0.3% to 142.44, with the yen eking out small gains against the dollar as speculation of intervention from Japanese officials to support the beleaguered currency continued to circulate.

Risk sensitive was largely unchanged at 0.6885 after data showed that consumer and business sentiment remained subdued in the country, despite a mild improvement in recent months.

Leave a Reply

Your email address will not be published.

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.
AdonFinance
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