During today's Asian trading, the US dollar consolidated against major currencies after hitting its highest level since August 16 yesterday. Investors are being cautious ahead of the publication of the key US inflation report, which may affect the prospects for easing the Fed's monetary policy.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) decreased by 0.04% to 102.89. Yesterday, the index rose by 0.37%. Since the beginning of the month, the index has gained 2.1%, which is the largest increase since September 2023. As for the data, the consumer price index for September will be presented today at 12:30 GMT. The core CPI is expected to grow by 0.2% per month and 3.2% per annum in September. Meanwhile, lower prices at gas stations paved the way for a more significant decline in the overall consumer price index - the index is estimated to have increased by only 0.1% in September. If the forecast is confirmed, the overall inflation rate will drop to 2.3%, which corresponds to the inflation rate immediately before the pandemic in February 2020. But an upside surprise in CPI could force the Fed to doubt its confidence about the path for inflation. Yesterday, San Francisco Fed President Mary Daly said that she was less concerned now about resurgent inflation than about hurting the labor market. According to the CME FedWatch Tool, markets see a 86.2% probability of a 0.25% rate cut at the November meeting (compared to 67.9% a week earlier) and a 84.9% probability of a 0.25% rate cut in December (compared to 43.6% a week earlier), with a 0.5% rate cut expected by the end of the year.
The Australian dollar rose 0.2% against the US dollar, retreating from its lowest level since September 16, reached yesterday. The recovery of the Australian dollar was caused by the growth of the stock market in China (Australia's main trading partner) after the Central Bank launched a swap program aimed at supporting the stock market. Investors are also preparing for a press conference of the Chinese Ministry of Finance (to be held on Saturday), which will detail plans for fiscal stimulus.
The New Zealand dollar rose 0.4% against the US dollar after yesterday's collapse on the back of the outcome of the RBNZ meeting. The growth of the NZD/USD was due to partial profit-taking and technical factors.