Home›Forex›Major Pairs›Dollar rebounds after July CPI, markets keep September…

Dollar rebounds after July CPI, markets keep September hike view

MUFG said the dollar index slid to about 99.613 right after the CPI release, then climbed back to the 100.00 area as rate-hike pricing eased from roughly 12 basis points to about 9 basis points.

Reported · Written up by our desk · Major Pairs

The US dollar’s initial drop after the July CPI report quickly reversed, with the dollar index returning to around the 100.00 level, according to Lee Hardman at MUFG as summarized by FXStreet.

MUFG noted that July CPI matched consensus, driven by energy lifting headline gains, while core inflation stayed contained. The bank said this helped keep Fed policy expectations intact rather than prompting markets to abandon a September tightening call.

MUFG expects the Fed to leave rates on hold in September and projects USD stability over the summer. It added that even though markets trimmed near term hike expectations after CPI, the possibility of a September hike still means pricing is unlikely to fall much further right away.

The bank also pointed to upside inflation risks from elevated energy prices tied to uncertainty around reopening the Strait of Hormuz, while saying the lack of clear forward guidance from Fed Chair Kevin Warsh makes the policy outlook harder to read.

Latest closeDollar index 99.99 ▲0.2%

More like this

Sources