Precise Investors


Dollar down ahead of U.S. inflation data


The dollar index was 0.2% lower at 103.78 – though the U.S. currency firmed 0.1% to 150.71 vs. the Japanese yen

The dollar was mostly down on Monday ahead of U.S. durable goods orders and an inflation data this week that could provide more information on how soon the Fed may begin cutting interest rates.

The dollar index, a measure of the greenback against a basket of currencies, was 0.2% lower at 103.78 – though the U.S. currency firmed 0.1% to 150.71 vs. the Japanese yen.

U.S. durable goods data is due Tuesday, while January’s U.S. PCE index, which is the Fed’s preferred gauge of inflation, will be released Thursday.

Inflation figures in the euro zone, Japan and Australia are also due this week, besides a rate decision from the RBNZ and China PMI surveys.

The market is a bit cautious and the key driver for dollar/yen is U.S. yields, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

In the fourth quarter of last year, the market got very aggressive about the Federal Reserve easing and in the first half of Q1, the market adjusted, interest rates increased and the dollar advanced. That adjustment is over, and I think we will begin seeing weak economic data beginning with tomorrow’s durable goods orders, he added.

Japan’s nationwide consumer prices also are due on Tuesday and are predicted to show core inflation slowed to an annual rate of 1.8% in January, the lowest since March 2022.

That would complicate the BOJ’s plans to end negative interest rates in coming months, keeping the yen under pressure in the near term.

The euro was 0.3% higher at $1.0852, following gains against the dollar in eight of the last nine trading sessions.

ECB officials have reiterated their focus on inflation in the euro zone, especially the service sector and wage growth.

ECB President Christine Lagarde told European lawmakers in Strasbourg that wage growth remains robust across the euro zone but firms may be absorbing some of this rise via lower profit margins instead of raising prices.

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