© Reuters.
Investing.com – The US dollar rallied in early European hours on Wednesday, bouncing off a 15-month low, while sterling eased after weaker-than-expected UK inflation data.
At 02:55 ET (06:55 GMT), the US dollar, which measures the greenback against a basket of six other currencies, was trading 0.2% higher at 99.858, after falling on Tuesday to a low of 99.362, the lowest level since April 2022.
The dollar was boosted by the resilience of the American consumer
The dollar rebounded overnight after the release of US data for June. Although the headline figure rose less than expected in June, the May figure was revised upward, and showed more resilience, indicating continued consumer resilience.
The statement did not change expectations about a resumption of interest rate hikes this month after keeping them unchanged in June.
UK inflation slowed more than expected in June
It fell 0.7% to 1.2945 after Britain’s annual decline to 7.9% in June from 8.7% in May and a less than expected 8.2%.
And while the country’s CPI has moved away from its October high of 11.1%, it’s still well above the 2% target, and the market is still pricing in another 100 basis points of hikes this year.
The Euro retreated ahead of the latest CPI reading for June
It fell 0.3% to 1.1198, down 1.1276, the highest level since February 2022, which the pair hit during the previous session.
The final reading for June is also due later in the session and is expected to confirm inflation rose 5.5% year-on-year last month, down from 6.1% the previous month.
It is widely expected to raise interest rates again when it meets next week, but the single currency weakened after a well-known hawk at the European Central Bank opened up the possibility of the central bank halting discussion of the post-July rate hike cycle.
“For July, it will be a must,” board member Claes Nott, a well-known hawk, said in an interview Tuesday, regarding the rate hikes.
Elsewhere, it rose 0.3% to 139.62 ahead of the Bank of Japan’s monetary policy meeting next week, after falling to 137.25 on Friday, the lowest level since May 17.
It fell 0.5% to 0.6781, while it traded 0.5% higher to 7.2171, with the yuan continuing to struggle after data showed that China’s economic recovery slowed significantly in the second quarter.