Kantox currency update: US inflation expectations boost the dollar
The US dollar appreciated against its main peers on Wednesday, with the market contemplating stronger than expected US inflation figures, later today, which is expected to pave the path for the Federal Reserve to hike interest rates two more times this year.
EUR/USD reversal extends below 1.1700. The euro dropped sharply against a stronger dollar on Wednesday and extended its reversal from Monday’s highs near 1.1800 area to levels below 1.1700. As at London market opening times, the EUR/USD is trading at 1.1685.
GBP/USD: testing support at 1.3200. The sterling’s mirrored EURUSD price action on Wednesday and took further distance from Monday’s highs at 1.3365, although the pair remains steady above 1.3200 so far. As at London market opening times, the GBP/USD is trading at 1.3215.
USD/JPY breaks through six-month highs at 111.50. The dollar seems unfazed by market concerns about the consequences of the commercial war with China and accelerated its rally after breaking through six-month highs at 111.50, to reach levels past 112.00. As at London market opening times, the USD/JPY is trading at 112.25.
In the Calendar Today
In the EU May’s Industrial Production figures will gather some attention, although the main event is likely to be the accounts of the ECB monetary policy meeting. The Bank disappointed the markets with a particularly dovish message after the meeting which sent the euro tumbling. The interest of these accounts, therefore, will be to assess whether there are some dissenting voices within the committee.
In the afternoon, the US Department of Labour Statistics will release the US Consumer Prices Index. Inflation is expected to have accelerated to another six-year high, which would add reasons for the Federal Reserve to accelerate its rate hike path and might help the dollar to resume its uptrend.
09:00 GMT EZ: Industrial Production (MoM) (May)
Previous: 0.9% Expected: 1.2%
11:30 GMT ECB: Monetary Policy Meeting’s Accounts
12:30 GMT US: Consumer Prices Index (YoY) (Jun)
Previous: 2.8% Expected: 2.9%