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Before a big U.S. inflation report, the dollar is getting weaker.

In early European trading on Wednesday, the U.S. dollar went down, giving back some of its gains from the night before. This was done before important U.S. inflation data was released.

At 3:00 p.m. ET (08:00 p.m. GMT), the Dollar Index, which compares the dollar to a basket of six other currencies, was down 0.1% at 110.340, after rising nearly 0.8% overnight.

The main event of the day will be the release of the latest report on U.S. inflation for October. Traders will be looking for clues about whether the Federal Reserve plans to raise interest rates by another 0.75 percentage points or by a smaller half-point in December.

Related: Rates for the dollar, the euro, and the pound in Pakistan on November 9, 2022

The U.S. CPI for October will be released at 8:30 ET (13:30 GMT). It is expected to show a year-to-year gain of 8%, which would be the lowest since February. It is also expected to show a monthly gain of 0.6%, up from 0.4% the month before.

The CPI is expected to go up 6.5% for the year, up from 6.6% in the last reading, and 0.5% for the month, up from 0.6% in the last reading. This is based on prices that don’t include energy and food.

“A result in line with the consensus estimate of a 0.5% month-on-month rise in core inflation would likely keep expectations of Fed funds at 5% next year on track and keep the dollar supported,” said analysts at ING in a note.

Overnight, traders flocked to the dollar as a safe haven after hearing that crypto exchange Binance had dropped a plan to help its smaller, struggling rival FTX. This caused more people to sell digital currencies.

Even though the results of the U.S. midterm elections were still unknown, it seemed likely that Republicans would take control of at least the House of Representatives. This would likely lead to political gridlock in Washington.

Analysts at ING said that a Republican House and a Democratic Senate might be slightly good for the dollar because a weak Biden administration might have to focus on presidential executive orders, such as a more aggressive policy toward China.

The EUR/USD went down to 1.0006, but hasn’t broken below parity yet. GBP/USD went up to 1.1383 after a big drop of 1.6% overnight, while the risk-sensitive AUD/USD went down to 0.6401.

USD/JPY dropped 0.1% to 146.34, and the yen went up and down a little bit after falling to its weakest level since 1992. The Japanese yen will probably have a hard time making more gains because the country’s government is likely to keep its very easy monetary policy, while the Federal Reserve is widely expected to raise interest rates again in December.

Related: Asia FX Edges Down as the Dollar Holds Even Before Midterms

USD/CNY went up 0.1% to 7.2514. The yuan is under pressure because people are losing hope that China will ease up on its strict anti-COVID measures soon, even though the number of cases keeps going up in a number of cities.

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