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Dollar mostly flat as market mulls inflation outlook

The dollar traded little changed against major currencies on Friday as market speculation continues to swirl about the timing of Federal Reserve rate cuts amid signs of cooling yet persistent inflation and a softening U.S. economy. While consumer prices rose less than expected in April, leading to a risk-on flavor in equity markets, various Fed officials have sounded a word of caution about when rates may fall, limiting the dollar’s decline this week. The dollar index , which tracks the U.S. currency against six peers, fell 0.03% at 104.46 after ...

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FX Daily: Calm waters ahead

USD: Dollar drop halted The dollar decline stalled yesterday in line with our expectations, and we still think there is not enough thrust from US data to justify a significantly weaker greenback just yet. Aside from the inflation aspect – and markets may have reacted a bit too optimistically to the CPI and PPI – jobless claims also eased back yesterday to 222k after a jump to 232k one week ago. We had seen something similar in January, when they reached 225k but then dropped back to the 200-210k area. ...

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Dollar rebounds on hot US import prices

The dollar rose on Thursday after data showed U.S. import prices increased 0.9% last month, a jump that raised market fears that the Federal Reserve’s fight to tame inflation is not done and could delay plans for policymakers to cut interest rates. The market also was grappling with a drop in the number of Americans filing new claims for unemployment benefits last week that pointed to underlying strength in the U.S. labor market. The jump in the price index for U.S. imports in April was the largest one-month increase since ...

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FX Daily: Bearish dollar momentum may not last

USD: Dollar could stabilise in next couple of weeks Markets have given a greater weight to the encouraging news coming from two days of inflation figures, which has caused the dollar to almost entirely erase the gains after the CPI disappointment in mid-April. Yesterday, a core CPI print at 0.3% month-on-month marked the first slowdown in six months, while retail sales stagnated in April, adding to speculation of abating US economic momentum. For now, the fact that inflation remains too hot for the Fed to consider cutting rates does not ...

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Dollar slides after US CPI rises less than expected

The dollar fell on Wednesday after U.S. consumer prices rose less than expected in April, indicating inflation has resumed a downward trend in the second quarter in a report that raised hopes the Federal Reserve may cut interest rates in September. Also boosting optimism that the Fed was closer to a rate cut was a reading of U.S. retail sales that was unexpectedly flat last month, as higher gasoline prices pulled spending away from other goods in a sign the consumer was retrenching a bit. After inflation proved “sticky” in ...

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Dollar slips after unexpected rise in US producer prices

The dollar edged lower on Tuesday following an unexpected increase in U.S. producer prices in April amid strong gains in the costs of goods and services, indicating inflation remained stubbornly high early in the second quarter. The report from the Labor Department also showed wholesale goods prices rising solidly last month, though the cost of food declined. Traders trimmed their expectations for the Federal Reserve to cut interest rates in September after the report. The dollar index , a measure of the U.S. currency against six major peers, was down ...

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FX Daily: Slow disinflation, low volatility

USD: PPI, Powell and NFIB in focus today The currency market is awaiting the next big move as the US calendar picks up. Since the weekend, we have seen a moderate risk-on bias in G10 FX, with the safe-haven CHF, JPY and dollar trailing pro-cyclical European currencies. This may suggest investors felt no urge to increase defensive positions ahead of US inflation figures today and tomorrow. The CPI report will have a larger market impact, although we have seen the dollar moving on tier-two data lately, so today’s PPI figures ...

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Funds slash short yen positions at fastest pace in 4 years: McGeever

Debate is swirling as to whether Japan’s suspected currency market intervention to support the yen recently has been or will be a success, but if the aim was to target speculative activity, Tokyo may be feeling vindicated. At least for now. The latest Commodity Futures Trading Commission data show that hedge funds and speculators slashed their short yen positions by 20% in the week to May 7, the biggest weekly yen-bullish swing since March 2020. Funds have probably rebuilt some of that short yen position, as the dollar has climbed ...

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The world can survive a strong dollar – for now

The dollar is casting a long shadow over the world. The U.S. currency has surged on the back of American economic resilience and higher interest rates. Prudent fiscal management and less foreign currency debt has helped to insulate most countries from the effects of this imbalance. But if the greenback keeps rising, commodity importers and emerging markets have a lot to worry about. The dollar is on a tear. An index that tracks its value against a weighted basket of currencies of major U.S. trading partners has risen by around ...

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Dollar drifts as traders eye US inflation data; frail yen in focus

The dollar was steady on Tuesday as investors awaited an inflation report this week that will likely shape the U.S. rates outlook, while the yen was hovering near a two-week low, stoking intervention worries. The currency market has been sedate this week, with investors seeking to gauge what the path the Federal Reserve will take this year in the wake of recent softer-than-expected U.S. labour market data and comments from central bankers. They have had to dial back their expectations of rate cuts this year due to sticky inflation and ...

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Dollar slips as market awaits key inflation data

The dollar slid versus most major currencies on Monday amid expectations key U.S. data this week will show a slowing pace of inflation and consumer spending at a time of recovering European economies that also could be bolstered by interest rate cuts. The dollar has outperformed this year on the narrative of U.S. exceptionalism, as much of the world was still in recovery mode from the pandemic while the U.S. economy was surprisingly strong. The Federal Reserve is now expected to cut rates by 25 basis points as early as ...

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FX: Tokyo struggles to turn the tide

After a spike last month, FX volatility is drifting lower again. Two factors are driving this move: the less hawkish outlook on Federal Reserve policy and Japanese authorities entering FX markets to stabilise USD/JPY. On the former, last month’s theme of ‘divergence’ did not last long. Jerome Powell’s dovish FOMC press conference was enough to thwart those positioning for unchanged Fed rates this year. We think we may well have seen the dollar’s pre-election peak and the dollar will again be sensitive to any decline in US activity and particularly ...

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Why China’s tolerance for a cheaper currency may be temporary

Currency markets are reading subtle signals from Chinese authorities as an indication they are slowly nudging the yuan lower to regain export competitiveness, but analysts say protracted yuan weakening is neither the intent nor desirable. The biggest signal of tolerance for a weaker yuan has come via the People’s Bank of China’s (PBOC) daily reference rate CNY=SAEC, or fixing, around which the yuan CNY=CFXS is allowed to trade. Having used the fixing to contain the yuan’s fall from November even as currencies of trade rivals such as Japan and South ...

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FX Daily: Close call on a Romania rate cut today

USD: US and China to drive the dollar this week We see two key drivers of the dollar this week. The first is US April price data released on Tuesday (PPI) and Wednesday (CPI). After the dovish FOMC meeting and the soft April NFP sucked the momentum from the dollar’s upside, the question is whether price data can actively contribute to the dollar’s downside. The bigger risk of that probably comes tomorrow, where any softer PPI readings could point to a lower core PCE deflator figure (the Federal Reserve’s preferred ...

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FX daily trading volume rises in April to $2.16 trln -CLS data

Average daily trading volume in the global currency market rose to $2.16 trillion in April, up 11.4% from a year earlier, according to data from CLS, a provider of settlement and aggregation services for the foreign exchange industry, released on Friday. The increase was driven by a rise in volume across all major FX instruments, said Lisa Danino-Lewis, chief growth officer at CLS, in a statement. FX spot transactions saw the largest jump, with average daily volumes rising 22.5% from levels seen a year ago to $525 billion. FX forwards, ...

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