Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

US dollar rises, in consolidation mode, ahead of inflation data

Published Feb 12, 2024 04:09AM ET Updated Feb 12, 2024 04:49PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
 
USD/JPY
+0.22%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
+0.36%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EUR/USD
+0.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Gertrude Chavez-Dreyfuss and Herbert Lash

NEW YORK (Reuters) -The dollar rose modestly against major currencies on Monday, as investors braced for data on U.S. inflation and retail sales this week for clues on when the Federal Reserve may begin widely anticipated interest rate cuts.

In cryptocurrencies, bitcoin hit $50,000 for the first time since December 2021, boosted by inflows into exchange traded funds backed by the digital asset. It was last up 5.6% at $50,207.

The dollar index, a measure of the greenback against six of its peers, was up 0.1% at 104.12, as the market expects the consumer price index (CPI) for January - due to be released on Tuesday - to give the Fed further confidence that inflation is slowing towards its 2% target.

Wall Street economists expect the year-on-year CPI to rise 2.9%, down from 3.4% in the previous month, according to a Reuters poll. The core CPI is also expected to have slowed its growth on a year-on-year basis in January to 3.7%, from 3.9% in the prior period.

"Psychologically, dropping down into the 2s (in the CPI year-on-year) even though it is 2.9% for the headline CPI number would be a good boost for market sentiment," said Amo Sahota, executive director at FX consulting firm Klarity FX in San Francisco.

"We're in a holding pattern here. There seems to be no directional trades. It's really like: Let's just take a breath before tomorrow's (CPI) data, before we make the next push in either direction."

Ahead of the CPI report on Tuesday, the Federal Reserve Bank of New York released on Monday its January Survey of Consumer Expectations, which showed inflation a year and five years from now were unchanged at readings of 3% and 2.5%, respectively, while the projected rise in inflation three years from now dropped to 2.4%, the lowest since March 2020, from December's 2.6%.

"The market is in a reasonably good mood going into Tuesday, hoping that we're going to get a similar outcome," said Klarity FX's Sahota.

Retail sales for January are due out on Thursday, with economists expecting a 0.1% decline for January, from a 0.6% rise in December, a Reuters poll showed.

The euro slipped 0.1% against the dollar to $1.0771, falling from a 10-day high touched in early trading. A reading of the euro zone's economic growth in the fourth quarter on Wednesday could provide fresh direction.

"While it won't necessarily impact CPI dramatically this month, the most recent round of PMI (purchasing managers index) surveys showed prices increasing for 58.5% of respondents across the two surveys, suggesting inflation could well tick up as we move into spring," Matthew Weller, global head of research, FOREX.com and City Index, wrote in a research note.

"This is no doubt a concern for the Fed, and may lead to a smaller-than-expected reaction even if this week's (lagging) CPI reading comes in below expectations," Weller added.

Changing expectations of when and how quickly central banks will cut interest rates as inflation falls are a significant driver of currency markets at present.

Strong jobs data this month has largely taken a Fed rate cut in March off the table, with markets seeing a move in May as somewhat more likely.

Elsewhere, there is plenty of data due this week in Britain, including inflation and gross domestic product (GDP) numbers with the former, on Wednesday, similarly likely to influence opinion on when the Bank of England will start to cut interest rates. It is currently seen lagging the Fed and ECB.

Sterling was last trading at $1.2628, little changed on the day.

Markets are also keeping an eye on the highly rate-sensitive yen, which strengthened sharply late last year as markets priced in early U.S. rate cuts, but has since weakened as that timing got pushed back.

Japanese authorities intervened in late 2022 to prop up the yen, which weakened to as much as 151.94 per dollar. The dollar was last flat against the yen at 149.31.

US dollar rises, in consolidation mode, ahead of inflation data
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Brad Albright
Brad Albright Feb 12, 2024 11:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is this what people mean when they warn of the world abandoning the US dollar?
Joel Rieck
Joel Rieck Feb 12, 2024 11:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The world isnt abandoning the dollar as its been strong lately. Turn off the conspiracies and focus on the data.
Brad Albright
Brad Albright Feb 12, 2024 11:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Joel Rieck That was my point. I was being sarcastic.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email