All roads lead to Friday’s US CPI

Traders are now turning their focus to US inflation data out Friday for clues on monetary policy in the world’s top economy.

Federal Reserve speakers overnight said soft US inflation was a problem as they played down the risk of market disruption when the central bank starts shrinking its balance sheet.

The comments reinforce market expectations officials will keep interest rates on hold next month, putting pressure on the greenback.

The US dollar was weakening on forex trade Tuesday, sliding beneath 1.18 to the euro and at about 110.6 yen.

But analysts said moves this week could be muted.

“Given the enormity of inflation metrics in the Fed’s rates outlook, I suspect traders will be reluctant to commit big views prior to the event and even more so given August’s sparse liquidity conditions,” said Oanda’s  Stephen Innes who heads trading in Asia

Business Times via AFP

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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