Upside risks for the Dollar dominate ahead of US inflation data – Commerzbank

FXStreet Insights Team FXStreet

The FX market is quite nervy about today’s January inflation data. Economists at Commerzbank expect the US Dollar to remain on a solid foot for the time being.

There is very little reason for the Fed to become less restrictive

“For now, the risk tilted towards a stronger Dollar is likely to dominate at present.”

“As long as the labour market remains strong, with inflation remaining well above the target, there is very little reason for the Fed to become less restrictive. This is unlikely to be changed by today’s inflation data.”

“Only once there is a clear indication that the monetary tightening is having a significant cooling effect on the US economy, the framework conditions have been created for a fall in inflation, followed by rate cuts. The Dollar is only likely to tend weaker at that state.”

See – US CPI Forecast: Preview from 12 major banks, inflation continues to decelerate

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FXStreet Insights Team

FXStreet

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