U.S. dollar acts cautiously on inflation, Powell’s testimony Reuters

Author: Tom Westbrook

SINGAPORE (Reuters)-Prior to the release of the US inflation data, the currency market was in a state of tension on Tuesday, and the U.S. dollar fell a few times. Traders believed that the data might provide clues about the timing of cuts and interest rate hikes.

As investors reassessed their assumptions about long-term low interest rates in the United States, the possibility of an unexpected shift in the Fed’s tone in recent weeks has boosted the dollar.

The US dollar fell slightly against the euro to 1.1868 US dollars during the Asian session, but the US dollar against the euro still rose by about 2.2% in a month.

In addition to the imminent US inflation data, the ECB President Christine Lagarde’s comments on Monday also restrained the further trend of the euro, saying that there have been mild changes in forward guidance.

Economists surveyed by Reuters predict that the US consumer price index will rise 0.5% from May and 4.9% from the same period last year. Traders believe that the mistakes of either party could push the dollar and bond markets by changing their expectations of interest rates.

Chris Weston, research director at broker Pepperstone, said: “My rough script is that we need a headline year-on-year figure of more than 5.5% to really ignite this market.” Boost bond yields and the dollar.

“The headline printed figure is less than 4.5%, we should see and bear the pressure,” he said.

Kit Juckes, a strategist at Societe Generale (OTC:), also believes that the US dollar is facing downside risks and expects a greater reaction — boosting the yen — if inflation is indeed lower than expected and investors believe that easing policies can continue to be more severe. Long time.

The data will be released at 1230 GMT.

In Asia, the latest exchange rate of the yen to the dollar is 110.37. The Swiss franc was steady at 0.9146 against the US dollar, close to a one-month high. The Australian dollar rose slightly to US$0.7491 against the US dollar and the British pound rose 0.1% to US$1.3895.

Powell, the Reserve Bank of New Zealand leads

In addition to inflation, Fed officials are about to appear in court to further test the dollar, and the market is very sensitive to any remarks about early withdrawal.

Chairman Jerome Powell testified before Congress on Wednesday and Thursday, while officials Neil Kashkari, Rafael Bostic and Eric Rosengren attended on Tuesday. [FED/DIARY]

Traders are also paying attention to New Zealand on Wednesday, when inflation data will be released, and the central bank will meet for the first time, because the strong business investigation prompted the swap market to expect to start raising interest rates as early as November.

The Reserve Bank of New Zealand is not expected to change policy or issue forecasts, but may adjust its guidelines.

“This statement should support the current market pricing,” Westpac analyst Imre Speizer said in a report, saying that this move may give a slight boost. “Our hawkish scenario (we think there is a 25% chance) contains an implicit signal that tightening may begin at any time in the next few meetings.”

The New Zealand dollar recently rose 0.1% to $0.6993, slightly below its 20-day moving average. [NZD/]

In other respects, after surprisingly strong trade data eased concerns about a slowdown in the world’s strongest economic recovery, it rose to a nearly one-week high.

The final transaction price was 6.4655 per US dollar.

The United States stabilized at 92.222. Cryptocurrencies are under pressure. Bitcoin fell 1% to US$32,789 and Ethereum fell below its 200-day moving average to US$1,990.