Dollar strength pressures yen, yuan, Australian dollar increases on inflation surprises
Date
6/27/2024 6:05:25 AM
(MENAFN) On Wednesday, the dollar maintained its strength against both the yen and the yuan, as global markets awaited crucial US consumer price data due later in the week. The yen traded at 159.78 to the dollar, a level that sparked concerns among traders about potential intervention by Japanese authorities. This concern stemmed from its proximity to the threshold where the authorities had previously intervened by purchasing yen back in April. Meanwhile, the yuan also faced downward pressure, slipping to its lowest point in seven months at 7.2664 yuan to the dollar, amidst ongoing dollar strength.
In contrast, the Australian dollar saw a notable increase, climbing 0.5 percent to USD0.6678, driven by unexpected inflationary spikes in May, marking its highest level in six months. This surge in inflation raised speculation about the possibility of interest rate hikes by the Reserve Bank of Australia (RBA). Similarly, Canada experienced a brief uptick in its dollar following an unexpected inflation surge, pushing it to its highest level in three weeks.
Elsewhere in currency markets, the euro stabilized at USD1.0710 during Asian trading, reflecting cautious sentiment as investors awaited developments from upcoming US economic data releases. The New Zealand dollar hovered around USD0.6116, while the British pound remained steady at USD1.2688, both showing subdued trading activity amid anticipation of US economic indicators.
Market participants are particularly focused on Friday's release of US data, which is expected to show a slowdown in the annual growth rate of the core personal consumption expenditures (PCE) index to 2.6 percent in May. This anticipated decrease, to its lowest level in over three years, could potentially pave the way for future interest rate cuts by the US Federal Reserve. The core PCE index is closely monitored by the Fed as its preferred gauge of inflation, influencing its monetary policy decisions.
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