Dollar Edges Higher as Traders Brace for US CPI
A Bloomberg dollar gauge edged higher ahead of US inflation data due Wednesday, with expectations of still-elevated consumer prices tempering bets on rate cuts. Donald Trump’s backtrack of 50% tariff on Canada also slightly eased worries over US growth.
The Bloomberg Dollar spot index rose 0.1%; recouping some of the losses on Tuesday.
US President Donald Trump dialed back his latest trade-war threat against Canada hours after making it, while downplaying the risk of a tariff-led recession that’s sent US markets into a nosedive.
The US 10-year Treasury yield down about a basis point to 4.270%.
USD/CAD traded flat at 1.444.
EUR/USD down 0.1% to 1.0908; the pair rose as much as 1% to 1.0947 on Tuesday, the highest since Oct. 11.
“I think it’s time for some consolidation in the euro’s rally, which has affected the DXY index significantly,” said Alvin Tan, head of Asia foreign-exchange strategy at RBC in Singapore
Market is currently pricing just two ECB rate cuts by the year-end versus three Fed cuts, which seems very lopsided; it reflects too many Fed cuts.
EUR/USD should be close to 1.08 given a shorter yield differential with the exchange rate, inflation and monetary policies, Paul Mackel, global head of FX research at HSBC, wrote in a note.
Raising 2025 year-end forecast for the pair to 1.04 from 0.99 previously.
USD/JPY rose 0.2% to 148.02.
Bank of Japan Governor Kazuo Ueda indicated he’s not too concerned about the country’s government bond yields ascending to the highest level since 2008, signaling he’s not planning any imminent action to counter the moves.
AUD/USD fell 0.1% to 0.6292.
NZD/USD fell 0.2% to 0.5705.
Source: Bloomberg
