Dollar Gains Ahead of Trade Data Release
The United States (U.S) dollar moved higher against its major trading partners early Tuesday ahead of the release of data on the international trade gap for April and weekly Redbook US retail sales, but the focus is still on Friday’s May consumer price report.
The Federal Reserve is widely expected to raise its federal fund rate by 50 basis points at its next meeting on June 14-15, with recent comments from Fed officials supporting that expectation and pointing to a further 50 basis point increase at the July 26-27 meeting as well.
Federal Reserve officials remain in a quiet period this week ahead of the June meeting, so there are no appearances on the schedule. Consumer price data is unlikely to have any impact on the next week’s expected rate increase but could help determine the path of future increases if it shows that inflation has already begun to slow.
Other data this week include wholesale inventories for April on Wednesday, initial jobless claims on Thursday and the preliminary Michigan Consumer Sentiment Index for June on Friday.
A quick summary of foreign exchange activity heading into Tuesday shows that GBP-USD fell to 1.2517 from 1.2529 at the Monday US close and 1.2552 at the same point Monday morning.
Prime Minister Boris Johnson won a confidence vote Monday but over 40% of the members of his own party wanted him ousted. The UK services PMI fell in May due to the fastest rise in costs since 1996, data released earlier Tuesday showed.
The Bank of England meets next on June 16 where another increase in interest rates is expected. EUR-USD fell to 1.0676 from 1.0696 at the Monday US close and 1.0727 at the same point Monday morning.
German factory orders fell sharply in April while construction PMI hit a nine-month low in May, data released earlier Tuesday showed. Spanish industrial production, however, surged in April.
EU employment and gross domestic product will be released Wednesday one day before the European Central Bank meets Thursday. The ECB is expected to pave the way for its first-rate increase of the cycle at its July 22 meeting.
USD-JPY rose to 132.8199 from 131.8927 at the Monday US close and 130.6431 at the same point Monday morning. Japanese household spending fell in April as real wages declined, though the leading and coincident measures rose from March, data released earlier Tuesday showed.
Japanese inflation data will be released Friday. The Bank of Japan meets on June 16-17 and is expected to maintain its ultra-low interest rate regime to boost growth further. READ: Dollar Trades Stronger Ahead of FOMC Minutes
USD-CAD rose to 1.2589 from 1.2580 at the Monday US close and 1.2565 at the same point Monday morning. The monthly Canadian trade balance is scheduled to be released today followed by the Canada IVEY index.
After a 50 basis point rate increase at its meeting last week, the Bank of Canada is expected to push rates even higher at future meetings to fight inflation. The next meeting is scheduled for July 13. # Dollar Gains Ahead of Trade Data Release
