© Reuters.
Investing.com – The US dollar fell to a two-month low in early European hours on Wednesday ahead of the release of an important US inflation report, while the pound rose to a 15-month high on expectations of higher UK interest rates.
At 03:15 EST (07:15 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading down 0.3% at 101.140, extending losses from the start of the week after several officials indicated The Federal Reserve to the central bank was nearing the end of the monetary policy tightening cycle.
The US CPI is driving the dollar’s sentiment
A 25 basis point rate hike at the meeting later this month is largely set, but the US consumer inflation report, due later in the session, could help determine how many hikes remain in the reservoir.
Title is expected to rise 3.1% in June, after May’s 4% increase, which would be the slowest annual increase since March 2021, with a 0.3% increase. The annualized rate is expected to drop to 5% from 5.3%, down for the third month in a row.
Analysts said: “Our economist consensus expects a core reading of 0.3% m/m, which should continue to provide encouraging news on the inflation-cutting story – but still falls short of adjusting the Fed’s narrative or convincing markets to price in July’s increase. “. In ING, in a note.
The British pound jumps to a new 15-month high
It rose 0.1% to 1.2945, just below a fresh 15-month high of 1.2970 reached earlier in the session as traders anticipate further rate hikes from the highest rate of any major economy.
Data on Tuesday showed the British market rose at its joint fastest pace on record, adding pressure on the Bank of England to act, while the Bank of England, earlier on Wednesday, said the country’s banks were “strong enough” to deal with the risks of the mortgage rate crisis. growing real estate.
It rose 0.2% to 1.1025, just below a two-month peak, with weak data failing to dampen expectations for further rate hikes.
The Bank of Canada is preparing to rise again
It fell 0.1% to 1.3224, ahead of the Bank of Canada’s latest, which is expected to lead to a second consecutive rate hike by a quarter point.
In June, the central bank raised the overnight interest rate to 4.75% after a five-month hiatus, saying that monetary policy was not sufficiently restrictive given inflationary pressures.
The yen fell 0.6% to 139.58, with the yen likely to post a fifth session of gains, the longest winning streak in about seven months as US Treasury yields fell sharply.
It rose 0.1% to 0.6693 while it rose 0.1% to 0.6205 after keeping interest rates on hold as expected.