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Dollar stays mixed ahead of key US CPI as traders weigh Fed rhetoric
OCBC says the CPI print could be pivotal for September FOMC pricing, with a near-even market split between a hike and a hold.
The US dollar was largely mixed as markets waited for the next US consumer inflation release, with Middle East tensions and hawkish Federal Reserve messaging providing offsetting influences, according to FXStreet citing OCBC analysts Sim Moh Siong and Christopher Wong.
OCBC said the USD’s rangebound behavior and a supportive risk backdrop continue to favor carry trades in the near term, while CPI is expected to be a key catalyst for how markets price the September FOMC decision.
FXStreet also highlighted a separate upbeat US data point cited by OCBC: the NFIB Small Business Optimism Index rose to 99.8 in July from 97.4 in June, topping the 97.5 consensus estimate, with improvements driven by higher hiring intentions after a softer payrolls report.
OCBC expects CPI to shape September expectations, noting that a July core CPI reading of 0.3% month over month or higher would likely strengthen expectations for a rate hike rather than a hold.