Us Dollar In Demand Amid Upcoming Inflation Data

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Us Dollar In Demand Amid Upcoming Inflation Data

Us Dollar In Demand Amid Upcoming Inflation Data

We are going through Monday's European session &, and the demand for the US dollar has picked up amid a weak risk appetite.

All of this can be attributed to the highly anticipated inflation report from the US, due in the next few days. The inflation data was not considered a high-risk event a few years earlier. But all of this has changed post-COVID, as higher inflation led to an era of higher interest rates.

Dxy Up By 0.1%, Remains Supported Ahead Of Cpi

The last trading price of the Dollar index was 102.262, with a +0.1% change, which shows that the USD has a slightly upper hand against the other six major currencies. The earlier sessions showates that the USD is at a 3-week high against the competition.

The bottom line is that the Dollar is supported as the market looks for the inflation report. In the last week, the bullish trend in the USD was subdued after the reports that Q1 2024 would result in a first-rate cut.

Additionally, the jobs report from the US showed a healthy labour market with an increase in available jobs & and hourly earnings. Considering how the Fed closely shapes its policy based on the NFP report, paying attention to the jobs data makes sense.

Now, if we talk about the expectations about the CPI report, the market is looking forward to several 0.2% M/M. As for the annual inflation, the expected reading is +3.2%. According to experts, a higher reading will be good for the USD as it will further diminish the prospects of early rate cuts.

According to ING, the rest of the week will be entirely for the USD FX pairs as investors await the CPI release on Thursday. Given the circumstances, the USD will remain sensitive to upcoming downbeat data. Furthermore, the current risk environment in the US & and other big economies favours a strong USD.

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