Following yesterday’s heavy depreciation of more than 1%, the US dollar index continued to be under pressure on Thursday (11th) and edged lower in late trading, with expectations for inflation not as high as expected, prompting traders to readjust their bets on future rate hikes. The yen did not extend yesterday’s strong gains and fell slightly in late trading.
In late New York trade, the ICE U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, edged down 0.08% to 105.12. DXY fell more than 0.5% at one point, before recovering most of its losses.
UBS FX strategist Vassili Serebriakov thinks the dollar may have peaked, but he remains cautious about a sharp weakening in the greenback.
Fed officials’ attempts to temper market expectations for easing may have helped ease the dollar’s slide. Minneapolis Federal Reserve Bank President Neel Kashkari said a few days ago that there is still a long way to go before inflation is brought under control.
Traders recalibrated their forecasts to factor in the possibility of inflation peaking after the U.S. consumer price index (CPI) was flat on a monthly basis in July and below market forecasts, sending the dollar index up five The biggest drop in a month.
Fed funds futures traders are now pricing in a 58 percent chance of a 2-point rate hike in September and a 42 percent chance of a 3-point rate hike.
The labor market remained tight after data on Thursday showed that U.S. producer prices (PPI) unexpectedly fell in July due to falling energy costs, while the number of people claiming unemployment benefits rose for two consecutive weeks last week.
Karl Schamotta, chief market strategist at Corpay, said the easing environment in the global financial system was at odds with the policy Fed officials wanted to pursue, so for currency traders, the current market moves may only be short-term.
Foreign exchange analysts at MUFG also said that while yesterday’s CPI data significantly reduced the risk of the Fed raising interest rates by 3 yards, which would help dampen dollar demand, the data alone is unlikely to trigger further dollar selling.
The euro and yen were the two major currencies boosted by a weaker dollar. The euro continued to gain 0.20 percent to $1.0321 before the deadline on Thursday, while the yen edged down 0.11 percent to 132.99 yen after rising more than 1 percent the previous day.
The British pound, which also made strong gains yesterday, edged lower today, down 0.11% to $1.2198 by the time of writing, paring some of its gains.
In cryptocurrencies, bitcoin inched up 1.16% to $24,189 by press time, while ethereum rose 2.2% to $1,898.7. Inspired by the rehearsal of the ethereum merger upgrade, ether soared to a two-month high on Thursday.
As of Friday (12th) Taiwan time about 6:00 Price:
The dollar index was at 105.1234. -0.1103% The euro against the US dollar (EUR/USD) was quoted at $1.0320 per euro. +0.2039% GBP/USD (GBP/USD) was quoted at $1.2199. -0.1146% The Australian dollar against the US dollar (AUD/USD) exchange rate was quoted at 1 Australian dollar to 0.7102 US dollars. +0.3674% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.2763 Canadian dollars per US dollar. -0.0939% The U.S. dollar was quoted at 132.99 yen against the Japanese yen (USD/JPY). +0.0978%