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Weekly roundup: Disappointing inflation reading knocks USD exchange rates

currency-newsWeekly roundup: Disappointing inflation reading knocks USD exchange rates
As the US consumer price index slowed from 2.9% to 2.7% on the year in August this suggested that domestic inflationary pressures are easing, leaving the US dollar on the back foot.

With inflation trending back towards the Federal Reserve’s 2% target the case for the central bank to continue hiking interest rates weakened.

While markets continued to price in a September rate hike as a near-certainty this was still enough to drive USD exchange rates down across the board.

A general resurgence in market risk appetite and a larger-than-expected monthly budget deficit put additional pressure on the US dollar as the week drew to a close.

As major US data releases are a little thinner on the ground in the days ahead, USD exchange rates could struggle to return to an uptrend.

However, if the Trump administration proceeds with the implementation of fresh tariffs on Chinese imports a fresh bout of trade jitters may offer the US dollar a boost.

Evidence of strength within the US housing market could also limit the potential for further USD losses this week.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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