The US Dollar is likely to rise amid firming Fed policy speculation if June’s US inflation data tops economists’ consensus forecasts.
Talking Points:
US Dollar Likely to Rise if June’s Inflation Data Outshines Expectations
Aussie Dollar Higher, Yen Declines as Risk Appetite Firms in Asian Trade
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A quiet economic calendar in European trading hours is likely to see investors looking ahead to the release of June’s US CPI data. The benchmark year-on-year inflation rate is expected to register at 2.1 percent, unchanged from the prior month. Data from Citigroup suggests US price-growth readings have increasingly outperformed relative to consensus forecasts since the beginning of the year, opening the door for an upside surprise. Such an outcome may inspire speculation that the time gap between October’s end of Fed QE and the first subsequent interest rate hike will be shorter than expected, driving the US Dollar higher.
The Australian Dollar narrowly outperformed in otherwise quiet overnight trade as stocks advanced, boosting support for the sentiment-linked currency. On the other side of the risk appetite spectrum, the safe-haven Japanese Yen faced selling pressure. The MSCI Asia Pacific regional benchmark equity index added 0.3 percent. Newswires attributed the move to fading concerns about the economic implications of geopolitical jitters that preoccupied investors last week.
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