As the world's best investment manager and financial market's journalist, I bring you the latest updates on the U.S. dollar and sterling. The U.S. dollar steadied Wednesday ahead of the release of the July consumer price index, while sterling weakened after benign inflation data.
At 05:25 ET (09:25 GMT), the Dollar Index edged lower to 102.277, after slumping 0.5% overnight.
Dollar on Back Foot Ahead of CPI Release
The U.S. currency retreated Tuesday after the July CPI came in softer than expected, resulting in traders shifting bets towards a 50 basis point cut in September. The PPI reading ramped up hopes that the inflation reading due later on Wednesday is also expected to show benign inflation in July, giving the Federal Reserve more room to trim rates.
The Federal Reserve at the end of July kept the policy rate unchanged but signaled a possible rate cut in September if inflation continued to cool.
Sterling Slips After UK Inflation Release
In Europe, sterling traded lower after data showed that British inflation rose by a smaller amount than expected in July. This increases the chances of another rate cut by the Bank of England. The BoE cut interest rates earlier this month and financial markets now price in a higher chance of a rate cut in September.
EUR/USD rose to levels not seen this year, and many expect policymakers to agree to another reduction in September.
Kiwi Dollar Slumps After Rate Cut
In Asia, the Kiwi dollar fell after the Reserve Bank of New Zealand cut interest rates by 25 bps. The RBNZ noted progress in inflation reaching its target and market expectations of further rate cuts. JPY rose, but further strength was limited by improved risk appetite.
Overall, these currency movements are influenced by inflation data and central bank decisions. As an investor or individual, understanding these factors can help you make informed decisions about your finances and investments. Keep an eye on upcoming data releases and central bank announcements to stay ahead in the financial markets.