Will the Dollar’s Uptrend Continue?

In Asia on Friday morning, the dollar was higher ahead of U.S. inflation data after the European Central Bank (ECB) hinted at future interest rate rises.

By 1:09 a.m. ET, the U.S. Dollar Index, which measures the greenback against a basket of other currencies, had down 0.09 percent to 103.127. (5:10 AM GMT). The USD/JPY exchange rate dropped 0.40 percent to 133.79. The Australian dollar rose 0.13 percent to 0.7106, while the New Zealand dollar rose 0.19 percent to 0.6404. The USD/CNY exchange rate fell 0.03 percent to 6.6900, while the GBP/USD exchange rate rose 0.10 percent to 1.2502. In May, China’s producer inflation slowed to its lowest level in 14 months. The producer pricing index (PPI) increased 6.4 percent year over year in May, compared to 8.0 percent in April, due to lower demand for steel, aluminum, and other raw materials because of the COVID-19 interruption.

Investors Await Inflation Data

The consumer price index (CPI) increased 2.1 percent year over year in May, according to the statistics. After easing restrictions on June 1, Shanghai has resumed partial lockdowns owing to additional COVID-19 breakouts.

Meanwhile, investors are analyzing the ECB’s interest rate rise signals, which include a quarter-point boost in July and a larger hike if inflation continues strong. Inflation in the eurozone has already surpassed 8%. On July 1, 2022, the European Central Bank stopped its purchase of net assets.

Short-dated Treasury yields in the United States have risen. Investors are now looking to U.S. inflation data, released later in the day, for fresh clues on the Federal Reserve’s interest rate rise path. According to data, economists at Westpac predicted that the dollar index would settle between 101 and 105 and that it may rise further if U.S. CPI data and next week’s Fed meeting support a higher yield. Bitcoin was at $29,800 in cryptocurrency.