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Dollar Down, Inflation Data Looms as Next Test on Central Bank Interest Rate Hikes -Breaking

by Mike Robinson

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© Reuters.

By Gina Lee

Investing.com – The dollar was down on Tuesday morning in Asia, remaining a little below 2021’s peaks hit on Tuesday. Inflation numbers will be the next challenge for traders regarding the outlook on interest rates.

By 11:59 ET (5:00 GMT), the that monitors the greenback against other currencies had dropped 0.11%, to 93.942 (4:59 GMT).

This pair fell 0.35% to 112.82.

This pair fell 0.13% to 0.73410, and 0.07% to 0.77160. As traders remain wary of the possibility of 50 basis point (bps) rate increases by the Reserve Bank of New Zealand later in this month, the greenback fell overnight against the New Zealand dollars.

“If the RBNZ is of a mind to hike by 50bps, now’s the time,” ANZ analysts said in a note.

“That still seems incongruous with the uncertain global backdrop and cautious tone of other central banks. Still, until we know the outcome, markets will price in the risk.”

Inflation data from both China and the U.S. increased 0.09%, to 6.3960. Due Wednesday is inflation data. This includes price data indexes, from China as well as the United States. The data could also test central bankers’ view that inflation is temporary.

This pair increased by 0.05% to 1.3567

On Tuesday, the data will be presented by a panel of central bankers that includes Christine Lagarde, President of European Central Bank, and Jerome Powell (Chief of U.S. Federal Reserve).

Markets were surprised last week by the when it maintained its interest rates at 0.1%. Despite aggressive market predictions, both the and also didn’t raise their interest rates.

Standard Chartered analysts (OTC:), expect a rise in interest rates during the third quarter, with a slower increase thereafter. “We believe that discussions of rates increasing will end for a time. In a note, John Davies and Steve Englander said that central banks who provide guidance in advance discourage investors from making pricing decisions too soon.

“So we expect Fed officials to keep repeating that rate hikes are not imminent until a move is only a few months away,” the note added.

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