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Dollar set for CPI test as DXY holds key support levels
Markets are watching July CPI for clues on whether the Fed pauses or continues rate hikes, with forecasts pointing to headline inflation at 3.4% year over year.
The US dollar started the week ahead of the July CPI release, a data event expected to shape expectations for Federal Reserve policy at its September meeting, according to Yahoo Finance.
The outlet cites Reuters forecasts for headline CPI of 0.1% month over month after June’s reported 0.4% drop, and annual inflation of 3.4%. It also points to core CPI expected to rise 0.2% month over month and 2.5% year over year.
Recent market action, softer employment data, and geopolitical concerns are adding complexity to the Fed’s outlook, Yahoo Finance writes. The outlet also notes comments from an Atlanta Fed interim president highlighting concerns about very high inflation and uncertainty around energy flows from the Middle East, alongside reports that three Fed board members pushed for a rate hike at the July meeting.
For the currency complex, Yahoo Finance says the euro faces the same growth versus inflation trade off, with the ECB citing disrupted household spending tied to the Ukraine Russia conflict while also seeing July manufacturing output at its best level in nearly four and a half years. The pound’s focus is on the upcoming UK Q2 GDP release, with forecasts for 0.4% growth versus 0.6% in Q1, while the dollar index is last mentioned around 99.87, trading just above a rising trendline and a key support area near 99.42.
Latest closeDollar index 99.99 ▲0.2%