Pressure on risky currencies eases as US inflation concentrates – .

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Pressure on risky currencies eases as US inflation concentrates – .


Risk currencies hovered above their recent lows against the dollar and yen on Monday as fears of a slowing global economic recovery appear to have subsided for now.
The outlook for inflation in the United States and the speed of the Federal Reserve’s future policy tightening are again the focus of concern ahead of Tuesday’s consumer price data and testimony from Fed Chairman Jerome Powell, Wednesday.

“If we see strong data, the Fed may advance its projection for its first rate hike further from its current 2023 forecast. It would also mean it would have to complete its cut sooner,” said Shinichiro Kadota, senior strategist. in foreign currency at Barclays.

The euro was trading at $ 1.1873, retreating from its three-month low of $ 1.17815 set on Wednesday while against the yen, the common currency stood at 130.87 yen, against the highest low of 129.63 yen over 2.5 months of Thursday.

The British pound also climbed to $ 1.3900 as the Australian dollar rebounded to $ 0.7487 from Friday’s seven-month low of $ 0.7410.

Risk currencies slipped earlier last week as investors reduced their bets on them, in part because economic data from many countries fell short of market expectations.

Concerns over the delta variant of the novel coronavirus also contributed to the cautious mood, although few investors believed the economic recovery would derail.

Sales in risky currencies fell on Friday, however, and sentiment strengthened further after China reduced the reserve requirement ratio of banks across the board to support its economic recovery which is starting to falter.

On Monday, the Chinese yuan was flat at 6.4785 to the dollar, following Friday’s 2.5-month low of 6.5005.

A revival in risk sentiment hampered the safe haven value of the yen on Monday. The Japanese currency rose to 110.17 yen to the dollar, compared to a one-month high of 109.535 on Thursday.

With Monday’s data schedule relatively empty, many investors are looking to Tuesday’s U.S. consumer price data for June.

Economists polled by Reuters expect the core CPI to rise 0.4% from May and 4.0% from a year earlier after two consecutive months of strong price increases.

Any sign that inflation may be more persistent than previously thought could stoke expectations that the Fed may emerge from the current stimulus sooner, supporting the dollar against other major currencies.

Conversely, more benign data could lead investors to believe that the US central bank can afford to maintain an easy political framework for longer, thus encouraging more betting on risky assets, including risk-sensitive currencies. .

Cryptocurrencies were little changed, with bitcoin at $ 34,267 and ether at $ 2,137.

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