Dollar adrift ahead of U.S. inflation test; sterling firms

11-07-2024 09:52 AM

Ammon News - The dollar fell a touch on Thursday although moves were largely subdued ahead of a U.S. inflation report due later in the day, while sterling firmed on receding expectations for an August rate cut from the Bank of England.

The British pound rose to a one-month high of $1.28545 in early Asia trade, extending a 0.48% gain from the previous session after comments from BoE policymakers caused markets to scale back bets for an easing cycle to begin next month.

BoE Chief Economist Huw Pill on Wednesday said price pressures in Britain’s economy were persistent and that the timing of a first rate cut was an “open question”. His colleague Catherine Mann signalled she is unlikely to vote for an interest rate cut in August.

“Ahead of BoE’s 1 August meeting, the Monetary Policy Committee will have only one more set of data,” ANZ analysts said in a note.

Against the greenback, the euro gained 0.04% to $1.0834, and the Aussie dollar rose 0.01% to $0.6754.

The dollar was little changed at 104.95 against a basket of currencies.

Expectations are for core inflation in the U.S. to have risen 0.2% on a monthly basis in June, putting the annual figure at 3.4%.

“The consensus is looking for a benign 0.2% lift in the core CPI. We think that may also be the case,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Elsewhere, the New Zealand dollar rose 0.11% to $0.60885, nursing some of its losses from the previous session, when it fell 0.7% in the wake of the Reserve Bank of New Zealand’s dovish tilt in its monetary policy statement.

The yen continued to be weighed down by stark interest rate differentials between the U.S. and Japan, and last stood at 161.54 per dollar, near a 38-year low.

Many Japanese private banks who met with the Bank of Japan (BOJ) on Tuesday called for the central bank to halve its monthly bond purchases by around 2026, two officials with direct knowledge of the deliberations told Reuters.

The BOJ is expected to lay out a plan on how to taper its huge bond buying at its upcoming policy meeting on July 30-31, as it works gradually towards policy normalization.


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