Dollar Slips Amid Month-End Flow, Trade Talks
The dollar slipped against its Group-of-10 peers amid month-end flows and investor caution ahead of key US inflation data and the outcome of trade negotiations. The yen gained after the Bank of Japan boosted its inflation outlook.
Bloomberg Dollar Spot Index fell 0.2%. Still, the index has risen 2.4% in July, its first monthly gain this year, as traders reduced bets on Federal Reserve’s rate cuts and a raft of trade deals with key partners including Europe and Japan were announced ahead of the Aug. 1 deadline.
Traders now await Personal Consumption Expenditure data — the Fed’s preferred inflation gauge — as well as weekly jobless claims data to help gauge the health of the economy.
Meantime, President Donald Trump and Mexican President Claudia Sheinbaum plan to speak by phone on Thursday morning as a Friday deadline to avoid a 30% tariff nears with no agreement between the US and its largest trade partner. Deals are also in the offing for Thailand and Cambodia, while the outcome of US-China trade talks is also awaited.
USD/JPY fell 0.5% to 148.76 as the BOJ raised its inflation view said it will hike rates again if its outlook on the economy and prices are realized.
“The BOJ is gearing up for a rate hike later this year,” said Elias Haddad, a senior strategist at Brown Brothers Harriman in London. “Our base case is for USD/JPY to hold under 150.00, though Fed-induced dollar strength could trigger a brief overshoot”.
AUD/USD rose 0.5% to 0.6468.
EUR/USD gained 0.3% to 1.1436.
GBP/USD edged up 0.2% to 1.3268.
USD/CNH slipped 0.2% to 7.2004.
China’s central bank stepped in to stabilize the yuan with its daily reference rate, setting the fix around 7.15 per dollar on Thursday, diverging from analyst estimates by the most since late April.
Source: Bloomberg
