The Dollar tends to perform poorly in the immediate period after the CPI data – MUFG

FXStreet Insights Team FXStreet

Economists at MUFG Bank analyze how the US Dollar tends to perform after the release of the CPI report.

There is scope for downside surprises

The Dollar tends to perform poorly in the immediate period after the CPI data. In a six-hour period following the data, the USD has weakened in eight of the last ten months of CPI data releases with the data weaker than expected or in line with expectations in seven of those ten months.

The hurdle for a surprise to the downside is becoming lower in the core readings given the sharp declines in headline CPI will soon be behind us and we believe there is scope for downside surprises given those sharp falls in headline inevitably feed into underlying inflation. If that were to be evident today we would expect further falls in US rates and the Dollar albeit less than what we expected a few days ago given the Dollar selling of late.

See – US CPI Banks Preview: Inflation to step meaningfully lower in June

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.