Dollar Hits 2-Month Low Before US Inflation Data
Investors are betting that U.S. inflation data due later today will show a sharp slowdown, which could lead the Federal Reserve to end its aggressive rate hike cycle.
Economists polled by Reuters expect to see June U.S. consumer price inflation slow to 3.1% from 4% in May. If this forecast is correct, it would be the first time inflation has fallen below 4% since December 2021.
A slowdown in inflation would be a welcome development for the Fed, which is trying to bring inflation back to its 2% target. However, the central bank is still expected to raise interest rates by 25 basis points at its meeting later this month.
The dollar has been falling in recent weeks as investors have become more confident that inflation is peaking. The dollar index, which measures the greenback against a basket of six other currencies, is down about 2% from its recent highs.
If inflation does indeed slow, it could lead to a further decline in the dollar. This would be positive for other currencies, such as the euro and the yen.
In addition to the inflation data, investors will also be watching a speech by Bank of England Governor Andrew Bailey later today. Bailey is expected to talk about the UK’s economic outlook and the central bank’s monetary policy stance.
The overall tone of the market today is positive, as investors are hopeful that inflation is peaking. However, there is still some uncertainty about the outlook for the global economy, so volatility could pick up in the coming days.
- The article includes a quote from an investment director who discusses the implications of the expected slowdown in inflation.
- The article provides an update on the dollar index, which has been falling in recent weeks.
- The article mentions that investors will also be watching a speech by Bank of England Governor Andrew Bailey later today.