Dollar Trades Strong Ahead of U.S Inflation Data
The United States (U.S) dollar was higher against its major trading partners early Monday as markets look ahead to Wednesday’s release of April consumer inflation data and parse Federal Reserve officials’ speeches for signals.
After a 50-basis-point rate hike by the Federal Reserve and a mixed April employment report last week, markets will be looking at the CPI data, along with multiple Fed speeches this week, as an early indicator of whether the Fed needs to move with another 50-bp rate increase in June or if it can suffice with a smaller, 25-bp increase.
The data schedule is relatively light on Monday, with only monthly wholesale sales and inventories and an update to the Atlanta Fed’s GDP now estimate to be released.
A quick summary of foreign exchange activity heading into Monday shows USD-CAD rose to 1.2945 from 1.2904 at the Friday US close and 1.2835 at the same time Friday morning. Canadian building permits are scheduled to be released Monday.
The Bank of Canada next meets on June 1, when another 50-bp rate increase is expected, and a 75-bp hike is being priced in by some analysts. USD-JPY rose to 131.142 from 130.57 at the Friday US close and 130.252 at the same point Friday morning.
Japanese services PMI rose above the breakeven point in April, according to data released overnight. The Bank of Japan, unlike other major economies, remains on the stance that more accommodation is needed to spur growth. READ: Brent Crude Price Drops Ahead of OPEC Technical Meeting
EUR-USD slipped to 1.0538 from 1.0546 at the Friday US close and 1.0587 at the same point Friday morning. There are no EU data releases scheduled for Monday. In contrast to the Fed’s tightening cycle, the European Central Bank is expected to hold rates steady at its meeting on June 9.
GBP-USD fell to 1.2335 from 1.2344 at the Friday US close and 1.2369 at the same point Friday morning. There are no UK data releases scheduled for Monday. The BOE raised its target rate by 25 bp on Thursday. The next meeting is scheduled for June 16. # Dollar Trades Strong Ahead of U.S Inflation Data