Dollar Dips Against Major Currencies As U.S Inflation Hits 9.1%

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DollarThe United States (U.S) dollar declined against its major trading partners early Wednesday, apart from a rebound against the yen, ahead of a hot inflation report. Data from the US Bureau of Labor Statistics showed a 1.3% increase in consumer prices in June following a 1% rise in May, ahead of estimates for a 1.1% increase, according to Bloomberg.

Prices are up 9.1% in the past year, surging faster to a level last seen more than 41 years ago, according to data.

After last month’s stronger-than-expected 1% gain in consumer prices, overall CPI was forecasted to rise by 1.1% in June due to surging energy prices.  Core prices were expected to rise by 0.5% after a 0.6% increase in May, which would allow the

Earlier Wednesday, the Mortgage Bankers Association said overall mortgage applications declined in the most recent week, led by a drop in new mortgage applications that were partially offset by an increase in refinancing activity.

A quick summary of foreign exchange activity heading into Wednesday indicates that USDCAD slipped to 1.3003 from 1.3022 at the Tuesday US close and 1.3031 at the same point Tuesday morning.

The Bank of Canada is expected to announce a 75-basis point rate increase. Meanwhile, there are no Canadian data scheduled for release on Wednesday. USDJPY rose to 137.0084 from 136.8648 at the Tuesday US close and 136.9673 at the same point Tuesday morning. There are no Japanese data on Wednesday’s schedule.

The Bank of Japan is expected to maintain its accommodative monetary policy at its July 20-21 meeting and for an extended period after. USDEUR rose to 1.0058 from 1.0037 at the Tuesday US close and 1.0021 at the same time Tuesday morning. The pair approached parity overnight before rebounding.

EU industrial production accelerated in May according to data released earlier Wednesday. Consumer inflation data showed an acceleration in France and Spain but easing in Germany. The European Central Bank is expected to raise rates at its July 21 meeting.

GBPUSD rose to 1.1920 from 1.1888 at the Tuesday US close and 1.1845 at the same point Tuesday morning. UK GDP slowed on an annual basis in May, though not as much as expected, giving a lift to the pound overnight.

UK industrial production accelerated in May, with a rebound in manufacturing production after a decline in April.

The Bank of England meets next on Aug. 4 when it is expected to maintain its tightening cycle with the possibility of a larger 50-basis point increase after a series of smaller 25-basis point hikes. # Dollar Dips Against Major Currencies as U.S Inflation Hits 9.1%

 

 


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