Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements. Be ready to take action!
Evergreen buck approaches a 3.5 month maximum
On Monday, the evergreen buck fluctuated below the maximum for three and a half months versus the basket of other key currencies. The revenue of American government bonds headed south after the previous week it had surpassed 3% for the first time for four years.
The US dollar index, used to estimate the purchasing power of the US currency versus six major currencies, jumped by 0.16% ending up with 91.73. That’s the highest reading since January 11.
The previous week, the US dollar index managed to ascend 1.37% due to the surge in revenues of American government bonds as well as the prospects for accelerating the Fed's interest rate lift this year.
A higher interest rate normally appears to be a support for the evergreen buck, as it makes dollar assets more attractive for profit-seeking traders. The greenback soared after the previous week's yield of ten-year US government bonds managed to exceed the psychologically important level of 3% for the first time since 2014 – it strengthened forecasts of inflation surge.
At the time of writing, the revenue of US ten-year bonds inched down and accounted for 2.961%.
The US dollar tacked on versus the Japanese yen. The currency pair USD/JPY rallied by 0.18% hitting 109.25 after on Friday it had ascended to a maximum of two and a half months 109.52.
The volume of trading remains small because the Japanese markets are unavailable for the holiday, while most Asian exchanges are going to be closed on Tuesday.
The common currency went down. The currency pair EUR/USD edged down 0.14% trading at 1.2113, after Friday’s low for three and a half months - 1.2054.
The UK pound kept to a two-month minimum. The currency pair GBP/USD dived 0.18% being worth 109.24 after the resignation of the Home Secretary on Sunday. It heavily undermined the position of Prime Minister Theresa May in the final year of talks on Brexit terms.
Similar
Three Currencies to Watch This Week
We prepared an outlook of major events of this week. Check it and be ready!
The Fed won't miss these releases!
Here you'll find what awaits the market this week, from the CPI release to a possible gold plunge.
Latest news
Nonfarm Payrolls is in Focus Today
The situation on the labor market still looks optimistic. Today we expect the Unemployment rate data. 3.5% is expected.
No More US Debts in Sight
The first day of June should’ve brought us the US default. Unsurprisingly, the US House passes the debt ceiling bill at the latest possible moment.
Gold Rises as Central Banks Buy More
About 24% of global central banks intend to increase gold reserves in 2023. Rising inflation, geopolitical turmoil, and worries about interest rates are reasons to increase gold reserves.
