On Wednesday, August 11, the US dollar climbed following the positive jobs report and Fed’s hint of sooner asset tapering. Now, investors are eyeing the release of inflation data.
In addition, bets are increasing that the Federal Reserve will start tapering its asset purchase sooner than expected.
The US Dollar Index, which trails the US dollar in opposition to six other currencies, gained 0.01% to 93.062.
An analyst stated that hot inflation could also add to the market’s anticipation for rate hikes in 2022.
He added that the US dollar is expected to extend its gains. This is based on the recently released data and the upcoming CPI release late in the day.
Based on a recent poll, the US core consumer price index month-on-month is estimated to decline 0.40% against the 0.90% previously.
Another analyst said that another set of huge numbers above the Fed’s objective of 2% could add to the outlook that inflation is not permanent.
Therefore, it will escalate further chances that the central bank will decide for an earlier normalization.
Recently, Chicago Fed Bank President Charles Evans disagreed with Fed Chairman Jerome Powell’s statement that inflationary pressures are only temporary.
This week, other central bank officials which include Kansas City Fed Bank President Ether George will express their thoughts on inflation.
Meanwhile, the market is taking into consideration the continuous surge of COVID-19 infections globally which remains concerning.
The extended lockdowns in different parts of the world just like in Australia and Japan are affecting the economic recovery.
An economist said that investors need to take on board the probability of news regarding the Fed’s tapering while the pandemic is still dominant globally.
She added that this will likely result in a firmer US dollar in the preceding days.
Currency Exchange Rates over US Dollar
Moreover, the NZD/USD and USD/JPY pair both rose 0.01% to 0.7008 and 0.09% to 110.66, respectively.
The same with the EUR/USD and the USD/CHF which both jumped 0.02% to 1.1721 and 0.9228, respectively.
Consequently, the USD/CAD and the USD/SEK also rallied 0.08% to 1.2529 and 0.07% to 8.7220, respectively.
On the other hand, the AUD/USD pair plummeted 0.12% to 0.734. Australia’s Westpac consumer sentiment index fell 4.4% in August. It is against the 1.50% growth from July.
Additionally, the USD/CNY and the GBP/USD both lost 0.05% to 6.4830 and 0.10% to 1.3830, respectively.