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  • Writer's pictureanalysiswatch

Title: Dollar loiters off highs as traders eye CPI

Aug 09, 2022 04:00AM ET

By: AnalysisWatch

The dollar lurked just below recent highs on Tuesday as traders waited for U.S. inflation data due later in the week, which could take pressure off the Federal Reserve and put it on the greenback if it suggests the pace of price rises has peaked.

The data is due on Wednesday and the anticipation is likely to keep things calm until then.

The Australian and New Zealand dollars rose overnight and were steady in the pre-CPI calm in Asia. The Aussie held gains at $0.6977. The kiwi did likewise at $0.6276, leaving both just above their 50-day moving averages.

Sterling held at $1.2081 and the euro was stuck just above parity at $1.0189, with the continent's energy crisis meaning it may miss out on a boost if the dollar weakened. The yen rose slightly to 134.75 per dollar. On Monday, a New York Fed survey showed consumers' inflation expectations fell sharply in July, perhaps easing some of the upward pressure on rates from last week's strong jobs figures.

Economists polled by Reuters see year-on-year headline inflation at 8.7% -- incredibly high, but below last month's 9.1% figure.

Money-market futures show traders see about a two-thirds chance of a 75 bp hike next month and have started pushing expectations for rate cuts back, deeper into 2023.

Two-year Treasury yields, which track short-term U.S. rate expectations, held at 3.2157% on Tuesday, with benchmark 10-year yields 45 bps below that at 2.7572%.

EUR/USD rose 0.1% to 1.0206, USD/JPY fell 0.1% to 134.90, while the risk-sensitive AUD/USD fell 0.2% to 0.6976

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