Dollar Trades Strong Ahead of US Consumer Price Data
The United States,US, dollar was making improvements against its major trading partners early Thursday after the index that tracks the movement of the greenbak declines previous as markets look ahead to the release of February consumer price data.
Analysts expect the Consumer Price Index to be lifted sharply by energy, food, and housing prices. Also scheduled to be released on Thursday are weekly initial jobless claims and natural gas stocks and the US Treasury’s monthly budget statement for February.
Federal Reserve officials remain in a quiet period through next week’s Federal Open Market Committee meeting, where rising inflation is expected to spur a 25-basis point rate increase.
A quick summary of foreign exchange activity heading into Thursday shows that EUR-USD slipped to 1.1039 from 1.1077 at the Wednesday US close but was up from 1.0971 a day earlier.
The highlight of the day is the European Central Bank meeting, where a 25-basis point increase is possible, but markets are focused more on what the ECB says about future plans for rate increases and asset purchases given the balancing act between high inflation and the situation in Ukraine.
Italian producer inflation surged in January, based on data released overnight. GBP-USD fell to 1.3164 from 1.3186 at the Wednesday US close but was up modestly from 1.315 a day earlier. UK housing price data released overnight beat expectations.
The financial markets look ahead to the March 17 Bank of England meeting where a 25-basis point increase is expected.
USD-JPY rose to 115.9748 from 115.858 at the Wednesday US close and 115.8888 a day earlier. Japanese producer prices surged in February to their highest level since 1985, exceeding expectations, data released overnight showed. Japanese consumer spending data are scheduled for release on Friday.
The Bank of Japan meets on March 17-18. USD-CAD moved up slightly to 1.2809 from 1.2806 at the Wednesday US close but was well below the 1.2833 level at the same point a day ago. READ: Fed Chair Powell Sees 25 Basis Points Rate Hike Appropriate
There are no Canadian data on the schedule on Thursday, so the focus is on Friday’s monthly labour force survey for February following a decline in jobs in January. Bank of Canada officials have suggested that it may be necessary to raise interest rates further at future meetings, perhaps even by 50-basis points at once.
