Forex
Is the US dollar going down in anticipation of U.S. inflation data
Is the US dollar going down and is taking losses on Tuesday ahead of U.S. inflation data that may show some signs of slowing price growth. The euro has gained above parity due to hawkish comments from officials about the need for further rate hikes.
The dollar index to a basket of major currencies fell 0.15% to 108.169. The euro rose 0.11% to $1,013 after hitting a nearly one-month high of $1.0198 in the previous session.
The Japanese yen rose 0.29% against the dollar to 142.41 yen, helped by comments from Japanese officials about interventions.
Why is the dollar going down?
According to analysts’ consensus forecasts, core inflation in August was 0.3% monthly, the same as in July. The dollar’s rise has slowed as the market waits for inflation to pass its peak to entail a less aggressive rate hike by the Federal Reserve.
“CPI values will be very important to the Fed … it will probably take an acceleration, a strong CPI reading, for the Fed to raise rates by 75 basis points,” said Christine Clifton of Commonwealth Bank of Australia.
“If we get data broadly in line with the consensus forecast, we assume they will go for a 50 basis point hike.”
Germany’s Ifo Institute for Economic Research, reversing its forecast made three months ago, said Monday that Germany’s economy will contract next year because of rising energy prices.
“We certainly see a decline in the euro rather than an appreciation … expect the euro to fall below parity and stay there for quite some time, especially while all these energy supply problems persist,” Clifton said.
Earlier we reported that Wall Street rose for the fourth straight day ahead of the consumer price report.
U.S. stock index futures are rising Thursday, trading data showed. Markets are assessing the outcome of the U.S. Federal Reserve (Fed) meeting.
The Dow Jones Industrial Average (DJIA) futures rose 0.22% to 32,329 points, the NASDAQ high-tech index rose 0.96% to 12,828.5 points and the S&P 500 broad market index rose 0.48% to 3,989.75 points.
The Fed on Wednesday expectedly raised its benchmark rate by 25 basis points to 4.75-5% per year. The regulator noted that it does not expect the rate reduction this year, but allows it next year. U.S. exchanges were down 1.6% in Wednesday trading.
According to the CME Group, 55.8% of analysts now expect the Fed’s discount rate to remain unchanged in May, while 44.2% expect it to rise another 25 basis points. Thus, markets concede that the Fed may interrupt the cycle of hikes that began last March.
At the same time, shares of cryptocurrency exchange Coinbase were down 10.6% in pre-bid trading. The exchange this week received notice from U.S. authorities of an impending charge of violating laws.
Later in the trading, statistics on initial jobless claims in the U.S. for the week through March 18 will be released. Analysts forecast that the figure would increase by 5 thousand to 197 thousand applications.
Earlier we reported that the US budget deficit was $262bn in February.
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According to a report from the U.S. Treasury Department, the U.S. budget deficit in February was $262,434 billion compared to a $38.8 billion deficit in January. The Dow 30 also had problems.
Analysts at DailyFX suggested that the nation’s budget deficit for February was expected to be $256 billion. A year earlier, in February, the U.S. posted a budget deficit of $216,590 billion.
According to the GAO report, U.S. government spending rose 3.5 percent year over year last month to $524.548 billion, while revenue, in contrast, declined 9.5 percent to $262,114 billion.
Earlier, the U.S. edition of the Washington Post published an editorial stating that the new draft budget proposed by the Biden administration undermines U.S. national security and its ability to invest in the future, because it suggests a further growth of the U.S. national debt.
The WP editorial board noted that the new draft budget assumes a $2 trillion budget deficit, including due to the high cost of providing health insurance to the elderly of the baby boomer generation.
Earlier we reported that the EU has agreed to reduce energy consumption by 11.7% by 2030.
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