Dollar’s decline with upcoming global inflation data
The US dollar slightly decreased on Tuesday, remaining against other major currencies due to upcoming significant inflation statistics from major economies worldwide.
Statistics could greatly impact the global interest rate outlook and could potentially result in the US dollar experiencing its first monthly decrease of this year.
On Wednesday, the dollar continued its decline, following trends set by other key global market players.
Investors worldwide set their sights on inflation data, which are expected to shed light on pandemic’s impact economic recoveries.
If confirmed high inflation figures are correct, major economies’ central banks could start reducing their supportive policies, leading to interest rate increases.
The current week could potentially result in the US dollar recording its first monthly loss for the year as it marks the end of the month.
Experts advise investors to monitor these economic indicators closely, as a pivotal shift in market rates could greatly affect their investments.
Athanasios Vamvakidis, Global Head of Forex Strategy at BofA, suggested the Federal Reserve might start rate cuts as early as December of this year due to recent mediocre US economy and surprisingly robust numbers from the eurozone.
Vamvakidis also cautioned about the international market and that the Fed’s decisions can produce a ripple effect in the global economy due to troubled trade relations between the US and other significant economies like China and Europe.
Inflation data from Germany and the eurozone is closely monitored, with trading in the Asian market remaining relatively stable.
Focus will mainly be on U.S. core personal consumption expenditures (PCE) price index report, expected to be published this coming Friday.
A projection of the report exceeding expectations could trigger a rise in U.S. yields and a spike in the dollar, leading to worldwide ripple effects in the global financial markets.
On the contrary, the Bank of Japan’s three main inflation indicators fell below 2% this April for the first time since August 2022, indicating possible ambiguity for the upcoming interest rate increase timeline.
In other foreign exchange news, the British pound and the New Zealand dollar rose to their highest levels in over two months while Bitcoin and Ether saw decreases.
