US Dollar Slips as Yields Ease Ahead of US Inflation Data
(MENAFN- MENAFNEditorial)
The US dollar edged lower on Monday, gi’ing back part of Friday’s gains, as Treasury yie’ds eased ahead of Tuesday’s US inflation data. Markets still price in a 25-basis-point Federal Reserve interest rate hike in December, but have cut the number of increases expected through mid-2027. That repricing is weighing on yields and keeping the dollar soft despite last week’s stronger-than-expected labour market data. Safe-haven demand has also eased amid diplomatic efforts in the Middle East. No agreement has been signed yet, and markets remain exposed to renewed escalation.
Elsewhere, recent minutes from the Bank of Ja’an’s September meeting strengthened the case for a December hike. In Europe, markets are pricing in a December increase by the European Central Bank, although political tensions could cap the euro. Sterling draws support from the Bank of En’land’s first interest rate hike in more than three years, but Chief Economist Huw Pill played down the prospect of a prolonged tightening cycle, which may limit th’ pound’s gains against the dollar.
Looking ahead, Tuesday's inflation print is the main immediate test. A firmer reading would revive expectations of hikes beyond December and lift yields and the dollar, while softer data would extend the repricing and deepen th’ currency’s losses. Across the Atlantic, Chris’ine Lagarde’s speech and the UK GDP figures will also be closely monitored.
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The US dollar edged lower on Monday, gi’ing back part of Friday’s gains, as Treasury yie’ds eased ahead of Tuesday’s US inflation data. Markets still price in a 25-basis-point Federal Reserve interest rate hike in December, but have cut the number of increases expected through mid-2027. That repricing is weighing on yields and keeping the dollar soft despite last week’s stronger-than-expected labour market data. Safe-haven demand has also eased amid diplomatic efforts in the Middle East. No agreement has been signed yet, and markets remain exposed to renewed escalation.
Elsewhere, recent minutes from the Bank of Ja’an’s September meeting strengthened the case for a December hike. In Europe, markets are pricing in a December increase by the European Central Bank, although political tensions could cap the euro. Sterling draws support from the Bank of En’land’s first interest rate hike in more than three years, but Chief Economist Huw Pill played down the prospect of a prolonged tightening cycle, which may limit th’ pound’s gains against the dollar.
Looking ahead, Tuesday's inflation print is the main immediate test. A firmer reading would revive expectations of hikes beyond December and lift yields and the dollar, while softer data would extend the repricing and deepen th’ currency’s losses. Across the Atlantic, Chris’ine Lagarde’s speech and the UK GDP figures will also be closely monitored.
Appreciate your cooperation in publishing the analysis.
For any inquiry or more information please do not hesitate to contact us.
Regards
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