Dollar Falls, Inflation Data Looms With Next Test of Central Bank Rate Hike – News Couple

Dollar Falls, Inflation Data Looms With Next Test of Central Bank Rate Hike

Written by Gina Lee – The dollar fell Tuesday morning in Asia, staying slightly below the 2021 highs hit on Tuesday. Cryptocurrencies have scaled records, while inflation numbers loom as the next test of traders’ thinking about interest rate expectations.

The US dollar index, which measures the greenback against a basket of other currencies, was down 0.11% to 93.942 by 11:59 PM ET (4:59 AM GMT).

The USD/JPY pair fell 0.35% to 112.82.

AUD/USD fell 0.13% to 0.7410 and NZD/USD fell 0.07% to 0.7160. The dollar fell against the New Zealand dollar overnight as traders remain wary of the possibility of the Reserve Bank of New Zealand raising interest rates by 50 basis points later in the month.

“If the RBNZ plans to raise it by 50 basis points, now is the time,” ANZ analysts said in a note.

This still seems incompatible with the uncertain global background and the cautious tone of other central banks. However, until we know the outcome, markets will risk pricing it.”

USD/CNY rose 0.09% to 6.3960. Inflation data, including indices of consumer and producer price data from both China and the United States, are due on Wednesday. The data could also test central bankers’ view that inflation is temporary.

The GBP/USD pair rose 0.05% to 1.3567.

Ahead of the data, a group of central bank governors, including European Central Bank President Christine Lagarde and US Federal Reserve Chairman Jerome Powell, will speak on Tuesday.

The Bank of England gave the markets a surprise last week when it kept interest rates unchanged at 0.10%. The Reserve Bank of Australia and the Federal Reserve also did not raise interest rates despite strong market expectations.

Standard Chartered (OTC:SCBFF) analysts expect a rally in the third quarter of 2022, but a slow higher trajectory after that. “We believe the interest rate hike discussion will subside for some time. Forward-looking central banks discourage investors from pricing policy moves too long,” strategists Steve Englander and John Davies said in a note.

“We therefore expect Fed officials to continue to repeat that a rate hike is not imminent until the move is only a few months away,” the note added.

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