Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The US dollar has been declining against most major rival currencies since the beginning of the US trading session, on Thursday. The dollar’s performance is impacted by anticipations regarding the awaited US inflation.
The dollar index, which measures the performance of the American currency against a basket of major currencies, fell to 10,478 points, compared to the previous daily closing reading at 105.10 points.
The index rose to the highest levels over the course of Thursday’s trading at 105.43 points, compared to the highest levels of 104.72.
Recently, batches of economic data have been released that shed light on the possibility that the Fed will resort to slowing down the pace of rate hikes.
US Producer Price Inflation data will be released on Friday, amid expectations of a new decline in inflation for this price category, which increases the strength of expectations of a slowdown in interest rates starting from the current December meeting.
The latest US CPI and PPI reports helped a lot shape the narrative perceiving that inflation in the United States has peaked, consequently prompting a sharp fall in Treasury yields and pulling the US dollar away from its recent 20-year peaks.
The October PPI report helped to reinforce that notion after inflation came in at 8% on the headline rate, while core prices fell to 6.7% from 7.2%. Both CPI and PPI have been rising at a progressively slower rate since the summer peaks.
The big question that awaits answering is whether this trend can be maintained against a US central bank that does not want to be seen as going soft on inflation.
Given Fed Cahir Jerome Powell’s comments at the Brookings Institute last week, it seems certain that the Fed could slow the pace of rate rises next week to a 50bps hike. This week’s numbers are expected to confirm this narrative with a further slowdown to 7.1% on the headline and 5.8% on core prices.
