Investing.com – The US dollar held near a seven-week high on Thursday ahead of the headline inflation report, while the euro remained near recent lows.
At 04:15 EDT (08:15 GMT), the dollar index, which tracks the US currency against a basket of six other currencies, was trading largely unchanged at 102.684, near its highest levels in seven weeks. Earlier this week.
CPI data looms large
The dollar is trading in a narrow range on Thursday, but remains at elevated levels in the wake of Friday’s strong report that prompted the market to rule out the possibility of another 50 basis point interest rate cut in November.
The Fed’s September meeting showed that policymakers fully supported the central bank’s 50 basis point cut at the time, but they also remained noncommittal on the pace of future easing.
“Reading the minutes from the September FOMC meeting, there appears to be no sense of urgency on the part of the Fed to cut interest rates – even though it is a 50 basis point cut,” analysts at ING said in a note. “More sense that inflation panic is over, unemployment is on the rise and the risk management approach requires a policy reset.”
The focus was squarely on the date scheduled for later in the day, which will likely take into account the Fed’s interest rate plans. The data is expected to show headline CPI inflation fell slightly, while core CPI remained flat.
Traders saw a 79.5% chance of a 25 basis point cut in November, and a 20.5% chance of a suspension.
German retail sales rise
In Europe, it traded largely unchanged at 1.0939, after rising 1.6% in August month-on-month, a slight improvement on the previous month’s 1.5% gain.
However, this good news was tempered by the German government lowering its growth forecast for 2024, with Economy Minister Robert Habeck late on Wednesday predicting that gross domestic product in the euro zone’s largest economy will contract by 0.2% this year, down from expectations. A precedent of growth of 0.3%. .
This means Germany is expecting its first two-year recession in nearly two decades.
The bank meets next week and is expected to ease policy again after cutting interest rates twice this year.
It rose 0.1% to 1.3081, ahead of the Bank of England’s latest credit conditions survey, as traders look for clues on the likely path of future interest rate cuts by the central bank.
The Japanese yen is struggling
The index fell 0.1% to 149.13, after recording its highest level in more than two months.
The Japanese currency received little support from producer prices, which were stronger than expected, as markets bet that the Bank of Japan will have difficulty raising interest rates further.
The dollar fell 0.1 percent to 7.0771, with the yuan retreating from some recent weakness as traders looked to more stimulus measures from Beijing to support growth.
China’s Finance Ministry said it will hold a briefing on Saturday to outline its fiscal stimulus plans, after a raft of recent monetary stimulus measures largely disappointed markets.