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Dollar eyed ahead of US CPI, PPI as UK GDP set for midweek
With markets pricing a 55% chance of a September Fed rate hike, softer US inflation data could further weigh on the US dollar, while UK GDP could move sterling pairs on any surprise.
A busy week of inflation and growth releases is set to keep currency traders focused on potential shifts in rate expectations, with the US dollar at the center of attention, according to Action Forex.
The US CPI report arrives on 12 August, and current market pricing suggests a 55% probability of a Federal Reserve rate hike in September. Action Forex notes that a weaker-than-expected inflation reading could reduce those expectations and add pressure to the dollar, while June’s softer inflation data already contributed to a sharp dollar decline.
On 13 August, traders will also look at UK GDP and the US Producer Price Index. Action Forex said a significant surprise in UK growth data could increase volatility across GBP pairs, with weaker growth potentially weighing on the pound.
The same day brings US PPI, which Action Forex described as another read on inflation pressures before they reach consumers. With June’s weaker-than-expected PPI and core PPI readings having pushed the dollar lower, another soft report could strengthen expectations for easing inflation and keep pressure on the US currency.