U.S Dollar Moves Higher Ahead of Friday’s CPI Data
The US dollar moved higher against its major trading partners early Thursday, except for the yen, as markets look past another quiet data schedule toward Friday’s consumer inflation report and next week’s Federal Open Market Committee’s meeting.
A strong CPI reading on Friday would solidify expectations that the FOMC will accelerate the pace of asset price tapering at next week’s meeting. There are no Federal Reserve speakers this week due to the quiet period before the Dec. 14-15 meeting.
Thursday’s data schedule is highlighted by weekly initial jobless claims and natural gas stocks, as well as an update to monthly wholesale inventory and sales.
A quick summary of foreign exchange action heading into Thursday shows that EUR-USD slid to 1.1315 from 1.1342 at the Wednesday US close but is up from 1.1274 at the same point a day earlier.
Germany reported a smaller-than-expected trade surplus for October earlier Thursday, with both imports and exports higher.
However, that bit of good news was not enough to halt the downward trend for the pair from Wednesday’s peak. COVID restrictions will continue to restrain economic activity until the caseload slows.
GBP-USD slipped to 1.3184 from 1.3204 at the Wednesday US close and from 1.3217 a day ago. Calls for further government stimulus as COVID cases rise all but extinguished any expectation of a rate increase at next week’s Bank of England meeting.
USD-CAD rebounded to 1.2688 from 1.2652 at the Wednesday US close and 1.2620 a day ago after falling in the early part of the week ahead of the Bank of Canada’s meeting on Wednesday.
The BOC held rates steady, as expected, but markets were looking for a more hawkish statement and forward guidance than the Bank provided, a disappointment that weighed on the Canadian dollar.
USD-JPY slipped to 113.5208 from 113.6977 at the Wednesday US close and 113.7447 a day ago, though it did approach the 114 level briefly Wednesday before easing back. COVID cases have slowed in Japan and fiscal stimulus plans are close to completion, positives for the Japanese economy.
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