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Weekly roundup: US dollar fails to sustain post-CPI gains

currency-newsWeekly roundup: US dollar fails to sustain post-CPI gains
The US dollar traded in a wide range last week, as the currency was unable to sustain the spike which followed the publication of the US consumer price index.

At the start of the week, the US dollar struggled to gain a foothold, with the currency being undermined by falling US Treasury yields as well as the prevalence of a risk-on environment.

USD exchange rates then roared higher following the release of the latest US CPI figures, after they reported US inflation rocketed up to a dizzying 7.5% in January, the fastest pace of US price growth since 1982.

The US inflation release immediately saw USD investors begin to reprice their expectations for a March rate hike from the Federal Reserve as the odds of a half-percentage move jumped dramatically.

However the US dollar was unable to sustain these gains for long, with USD exchange rates stumbling again at the end of the session amidst a risk-on mood as well as a shock slump in US consumer confidence.

Looking ahead, the US dollar stands to benefit from fears over a Russia-Ukraine conflict, with skittish investors likely to favour the safe-haven currency amidst fears an invasion may be imminent.

On the data front, the publication of the minutes from the Fed’s most recent policy meeting will likely be the primary focus as USD investors look to gauge how much appetite there may be for a 50bps rate hike next month.

Elsewhere, data showing a rebound in US retail sales last month could help to bolster the US dollar in mid-week trade.
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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