The US Dollar lost ground across the board yesterday with the US Dollar index (DXY) shedding over 1% on the day as it hit 7-week lows at 94.43. USDJPY marked session lows of 99.54, while the EURUSD was up at 1.1322 throughout yesterday’s session.
The USD was hurt by some weaker US data. We saw inflation for the month of July that remained flat, while the Y/Y equivalent was softer than the previous and the expected figure. Inflation is an important variable for monetary policy.
This morning the buck managed a modest recovery, although in reality the indecisiveness of the move reflects the doubts on the probability of the Fed’s next rate hike. Later this evening at 20:00 Hrs we are expecting the release of the Fed Minutes for the July Meeting.
The British Pound took the cue from a weaker USD yesterday and managed a small rebound off 1.2866 lows seen in the previous day. The GBP managed also to see some support against the euro. Y/Y inflation data for July, also released yesterday, was better than expected and this lent support to the GBP. Today we have more important data from the UK, with data on employment expexted to be released later this morning.
Aside from the UK data, the highlight is likely to be the release of the Fed minutes this evening.
