3 weeks ago
Dollar near two-month low as US inflation data awaited
The dollar is the money used in the United States.
This week, its value compared to other money came close to the lowest point in two months.
Money experts are waiting for new numbers about inflation, which is when prices for things go up.
Last week, a report showed that the United States lost jobs in July.
That made many experts think the Federal Reserve might not raise interest rates in September.
Interest rates are the extra cost of borrowing money.
When experts think rates will not go up, the dollar can become less valuable.
The price of oil also went up a little because ships may have trouble using an important waterway called the Strait of Hormuz.
New inflation numbers come out this week, and everyone is watching them closely to see what happens next.
The dollar index held at 99.6, near its lowest level since June 2, as investors awaited U.S. inflation data.
July's U.S. jobs report showed a surprise loss of 23,000 jobs, cutting the odds of a September Federal Reserve rate hike to about 44% from 67%.
The euro edged up to $1.1558, sterling held near a five-week peak at $1.3490, and the yen was firm at 157.90 per dollar, well off its late-July low near 164.
Economists expect July core CPI to rise 0.2% month-on-month, easing the annual rate to 2.5% from 2.6% in June.
Brent crude rose 1.4% to roughly $85 a barrel on Strait of Hormuz uncertainty, and the Reserve Bank of Australia's rate decision is due Tuesday.
- Who
- The U.S. dollar and the Federal Reserve's rate path, closely watched by global currency traders and investors, along with central banks such as the Bank of Japan and the Reserve Bank of Australia.
- What
- The dollar hovered near a two-month low after surprisingly weak July U.S. jobs data cooled Federal Reserve rate-hike bets, with markets awaiting U.S. inflation data for direction.
- Where
- Global currency and commodity markets; the story was reported from Hong Kong.
- When
- Monday, Aug 10
- Why
- Unexpected U.S. job losses in July reduced the odds of a September Federal Reserve rate hike, and investors are focused on this week's inflation reports for clues on the next policy move.
Fed expected to hold rates steady
Fed may keep rates higher for longer
Federal Reserve's September rate decision
Fed expected to hold rates steady
Weak July jobs data and cooling inflation expectations support the view that the Fed will hold rates steady in September, keeping further pressure on the dollar.
Fed may keep rates higher for longer
Elevated oil prices and uncertainty over the Strait of Hormuz could keep inflation high, limiting the Fed's room to ease and potentially reviving 'higher for longer' interest-rate bets.
Key facts
- Dollar index
- 99.6, near lowest since June 2
- EUR/USD
- 1.1558, near strongest since mid-June
- GBP/USD
- 1.3490, near five-week peak
- USD/JPY
- 157.90, well off roughly 164 late-July low
- July U.S. jobs
- Shed 23,000 jobs vs ~80,000 expected; unemployment 4.1%
- September Fed hike odds
- About 44%, down from 67% a week earlier
- July core CPI expectation
- +0.2% month-on-month; 2.5% annual (June: 2.6%)
- Brent crude
- Roughly $85 per barrel, up 1.4% on Strait of Hormuz uncertainty
Quotes
Rodrigo Catril
Senior FX strategist at NAB Holdings
“"The weaker U.S. labor‑market signal has pulled down real‑rate expectations, extended the dollar decline... but not yet a clean easing story."”
livemint.com
“"Although there's a lot of inflation dynamics, the Fed will for now stay on the sidelines and wait to see how things play out."”
livemint.com
Sources
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