News forex today: The rally in risky assets, fueled by weak US inflation data in the middle of the week, has waned and market dynamics have become volatile ahead of the weekend. The US dollar index is moving in a narrow channel above the 105.00 level; the 10-year US bond yield is holding above 2.8% and the US stock index futures are making a small intraday gain after Thursday’s mixed Wall Street dynamics. 

Forex news daily: what is going on in the currency market?

EUR/USD registered a small intraday gain on Thursday and appears to have moved to secure just above the 1.0300 mark on Friday.

GBP/USD continues to oscillate in a narrow channel near 1.2200 in the early European morning as investors evaluate the latest released data. The U.K. The Office for National Statistics reported Friday that the country’s gross domestic product fell 0.1% quarter-over-quarter in the second quarter. Also, industrial production and manufacturing output fell 0.9% and 1.6% month-over-month in July, respectively.

Gold closed flat Thursday and remains under pressure near $1,790 early Friday, while U.S. Treasury yields remain resilient during the European session.

The USD\/JPY pair rebounded after falling below 132.00 on Thursday, but it didn’t gain momentum. The pair is now clinging to modest intraday gains, trying to climb to 133.50.

Rising crude oil prices are supporting the commodity-sensitive Loonie and the USD/CAD pair continues to decline to 1.2700 on Friday. A barrel of West Texas Intermediate crude is up more than 6% this week.

Earlier we reported that the dollar is falling faster than expected after the inflation data.

Is the American dollar going down? The dollar accelerated its fall against major currencies Thursday as traders lowered bets on an aggressive Fed borrowing cost increase following softer-than-expected U.S. inflation data a day earlier.

The dollar index to a basket of six major currencies, DXY fell 0.19% to 104.993. A day earlier, the greenback recorded its biggest daily drop of 1% over the previous day.

Why is the dollar going down against the euro? The dollar fell after the release of the US inflation data, with consumer prices unchanged in July compared to a 1.3% month-on-month increase in June. The July statistics came in lower than expected due to a sharp drop in gasoline prices, leading markets to believe again that the inflation ceiling is near.

The Fed is still “very, very far from declaring victory” over inflation, Minneapolis Fed Chairman Neel Kashkari said after the CPI release. He said the need to raise the Fed’s key rate to 3.9 percent by the end of this year and to 4.4 percent by the end of 2023 has not changed since the data release.

“Yesterday’s statistics clearly signaled a reduced likelihood of a further aggressive move by the Fed (+75 basis points) and hence helps reduce demand for the dollar, but equally, we believe that this data alone is not enough for a subsequent sell-off in the currency,” MUFG currency analysts said.

Earlier we reported that FX rate EUR/USD depends on US CPI.

FX rates EUR/USD have been unable to make a decisive move since the beginning of the week; market participants are taking a wait-and-see attitude ahead of the release of key US inflation data. According to FXStreet analyst Ehren Senzeger, the technical outlook suggests the pair could move in either direction.

“Although Reuters reported earlier in the day that eurozone money markets are now fully priced in a 50 basis point (bps) European Central Bank (ECB) rate hike in September, the single currency is struggling to attract buyers. German Finance Minister Christian Lindner said earlier in the day that Germany’s economic outlook looks fragile.

In the afternoon, the U.S. Bureau of Labor Statistics will release consumer price index (CPI) data for July. Annual inflation is expected to fall to 8.7% from 9.1% in June, while the core CPI, which considers volatile food and energy prices, will rise to 6.1% from 5.9%.

The forex eur usd live chart reaction to the inflation data should be fairly straightforward: a strong core CPI will cause the dollar to rally, while a weak one will dampen interest in the dollar. According to the CME Group FedWatch Tool, markets estimate a 66.5% chance that the Fed will decide to raise rates by 75 bps in September, suggesting that there is room for a significant US dollar index reaction if the data diverges from market consensus.”