Major currencies are moving lower ahead of the release of inflation figures, as the Fed continues to raise rates and traders continue to worry over the impact on the economic outlook.
Despite the recent reviews of the ECB, the euro area moved lower across the board in the early European session on Monday. The common currency was down as much as 0.68% at 1.1873, while the single currency’s relative strength against the dollar closed at an equal level of 0.8477.
The Pound slumped against the other currencies today as the Brexit drama continues to play out. The FTSE 100 was flat and the DAX held a modest gain. The S&P and the Nasdaq also rose modestly. The dollar was the major mover as it was helped by the US Inflationary report.. Read more about us dollar and let us know what you think.
- Euro & Pound Both Sidelined by Dollar
- Data on the Consumer Price Index (CPI) is in the spotlight this week.
- Following the passage of the Infrastructure Bill, the markets are upbeat.
The dollar has gained additional strength in the currency market since the middle of the week, as inflation concerns have resurfaced. In the currency market, the Euro is currently trading just over 1.17 versus the Dollar, a 5-month low, while the GBP is fighting a similar tale, with traders staying cautious ahead of US inflation data due later today. These are anticipated to come in hot again in July, with a rise of 0.5 percent, still representing a year-on-year increase of more than 5%.
The Dollar Advances Ahead of CPI Data
The strength of the US Dollar is perhaps the most important news of the day for forex traders. Many traders are taking a cautious approach to the day’s statistics as a result of this. This upward trend seems to have been fueled not just by the expectation of strong inflation numbers, but also by the belief that the Fed may begin tapering sooner than anticipated.
With a number of Fed Presidents scheduled to speak later today, they will almost certainly highlight this as a necessary move in light of the recent strong job numbers, but there is still plenty of concern about the rising number of COVID-19 Delta variant cases that have been reported across the country. In the United Kingdom, there is greater confidence with declining instances, but Sterling remains under pressure from the same Dollar strength.
Inflation is expected to remain high.
The CPI numbers, which will be published later today, will undoubtedly be closely watched by forex brokers and traders. Analysts predict that these will rise by 0.5 percent in July. This would result in another near-record figure for year-over-year growth over 5%, surpassed only by the rise from the prior month. If the figure comes in as expected, or if it misses on the upside, bond rates may rise.
The message from Jerome Powell and the Federal Reserve Board of Governors is unchanged. This is just a blip on the radar, which may well be the case, albeit not by design, if rising COVID-19 cases wreak havoc on the economy. Nonetheless, it is unlikely that today’s figure will have any impact on the Fed’s plan to reduce asset purchases.
The Stock Market Remains Upbeat
Despite growing worries about inflation, which may have a detrimental impact on the stock market, Wall Street remained upbeat Wednesday. The markets were higher, with many benefiting from the Senate’s passage of the Infrastructure Bill.
The only major index to slip slightly was the NASDAQ amid a treasury yield that has continued to tick up slightly. This is typically negative for the highly leveraged tech names. The S&P 500 meanwhile closed at a new record high. Early trading in the futures market was quiet with most electing to wait until later in the morning and the CPI figures.
Dash is a digital currency for payments that helps you get around the world quickly, securely and reliably. The price for Dash has seen big jumps this week, with the token jumping up to over $100 at 12:15 PST, before pulling back to around $110. This is because Wednesday, the US House of Representatives passed the American Healthcare Act (AHCA), which will likely lead to the cost of healthcare rising in the US over the next few years. This hike in prices is bad news for inflation, and is likely to push down the price of Dash.. Read more about 2021 inflation and let us know what you think.
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