Dol­lar con­sol­i­dates gains as US in­fla­tion data awaited

Business Daily (Kenya) - - MONEY & MARKETS GLOBAL -

The dol­lar con­sol­i­dated gains yes­ter­day, a day af­ter post­ing its big­gest sin­gle-day rise in six weeks as mar­kets looked for­ward to US in­fla­tion data that will de­ter­mine the near term trad­ing out­look for the strug­gling green­back.

With short bets against the dol­lar stuck near record highs de­spite this week’s rally, any up­side in­fla­tion sur­prise might trig­ger a broad-based pull-back in po­si­tion­ing.

“We view this dol­lar move higher as broadly a cor­rec­tive move and now the ques­tion is how much the dol­lar can re­cover be­fore the data,” said Vi­raj Pa­tel, an for­eign ex­change strate­gist at ING in Lon­don. Wor­ries

The dol­lar, which slid to a 10-month low of 107.32 yen last week on wor­ries over Hur­ri­cane Irma and North Korea, has climbed this week as risk sen­ti­ment im­proved and US Trea­sury yields edged higher.

The dol­lar was trad­ing 0.1 per cent lower against a broad bas­ket of cur­ren­cies at 92.416 in early trades yes­ter­day. It rose 0.7 per cent on Wed­nes­day, its big­gest daily rise since Au­gust 4, ac­cord­ing to Thom­son Reuters data. The US core con­sumer price in­dex is ex­pected to have risen 1.6 per cent on an an­nual ba­sis in Au­gust, which would be the low­est since early 2015, ver­sus 1.7 per cent in July.

The Fed­eral Re­serve has a two per cent in­fla­tion tar­get, and a se­ries of sub­dued price read­ings have damp­ened ex­pec­ta­tions for the Fed to raise in­ter­est rates again this year and weighed on the dol­lar.

“We don’t be­lieve the mar­ket is look­ing for a par­tic­u­larly strong CPI num­ber to­day but risk of any up­ward in­fla­tion sur­prise has been very un­der-priced,” Credit Agri­cole strate­gists said in a note.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.