USD: CPI needed to shake up FX market – ING

FXStreet Insights Team FXStreet

Global currency volatility has continued to drop rapidly as markets await developments on eurozone and US politics, as well as on the data side. The proximity to Thursday’s pivotal CPI release in the US may also be behind this week’s cautious trading in FX, ING’s FX strategist Francesco Pesole notes.

US Dollar to remain flat ahead of Thursday’s CPI report

“Today, Federal Reserve Chair Jerome Powell faces House policymakers for his second testimony, after yesterday’s Senate appearance had few repercussions on markets. Powell’s prepared remarks focused on two-way risks, reiterating the need for more data input to justify monetary easing. So, more of the same rhetoric from Powell, who’s happy with keeping markets relatively quiet.”

“The US Democratic Party revolt against President Joe Biden appears to have been fully sidelined by markets. Predict index of Biden’s probability of being the party's candidate in November has bounced back from 40% to 60% after recent signs that the internal push to replace him may indeed be insufficient.”

“We expect FX volatility to remain low today, a development that can favour an additional short-term recovery in high carry currencies like MXN and BRL, while keeping the pressure high on the funding yen. The dollar may remain broadly flat into tomorrow’s CPI.”

(This story was corrected on July 10 at 12:02 GMT to say "ahead of Thursday's CPI report", not Friday's).

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.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.