What happens to the dollar before the publication of US inflation data
The dollar is getting more expensive on the eve of the publication of fresh inflation statistics from the United States and on expectations of an earlier than predicted tightening of the Fed's monetary policy.
According to trading data, on Friday afternoon, the euro fell to 1.1269 EUR/USD against the dollar, while the US currency strengthened to 113.78 JPY/USD against the yen.
On December 22, the pound fell to 1.3211 GBP/USD (-0.1%), the Australian dollar weakened to 0.7151 AUD/USD, and the USD/CNY pair fell to 6.3664 (-0.2%).
The focus of attention of market participants is the publication of fresh inflation statistics from the United States. According to experts, in November, consumer prices in the States rose to the highest since 1982 – by 6.8% in annual terms. A month earlier, inflation was recorded at 6.2%.
It is worth noting that the data on the strengthening of inflationary pressure may accelerate the process of tightening the Fed's monetary policy.
According to a recent forecast by Morgan Stanley, in 2022 the Fed will raise rates twice (in September and December), and in 2023 - three times (in March, June and December). Earlier, the bank's analysts predicted an increase starting from 2023.
According to Tom Porcelli, chief economist at RBC Capital Markets, inflation will only accelerate in the future, and at the beginning of the new year its pace will approach 7%. Thus, the expert notes, an increase in rates is possible as early as March.
Recall reported that, according to Fitch Ratings experts, the value of the European currency is expected to reach 0.87 EUR/USD by the end of this year, and in 2022-23 – at 0.9 EUR/USD.
Paul Roberts
Paul Roberts 51 years old Born in Edinburgh. Married. Studied at University of Oxford, Department of Public Policy and Social Work. Graduated in 1997. Works at Standard Life Aberdeen plc.
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