Investing.com – The U.S. dollar rose on Tuesday ahead of key retail sales data and Federal Reserve policymakers as traders looked for clues to better assess the timing and pace of interest rate cuts.
At 04:20 ET (0820 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 105.125, but still below Friday’s 1-1/2-month high of 105.80. . .
Dollar Expects Volatile Trade
The US currency saw volatile trading last week, weighed down by lower inflation figures but then buoyed by the Federal Reserve cutting the number of cuts it forecast this year to one from three in March.
Investors are trying to figure out when the Federal Reserve will start cutting interest rates and will be looking at May retail sales data due later in the session.
Economists expect growth of 0.3% after they were unexpectedly flat in April.
Also of interest will be the speeches of a number of Fed representatives during the week.
The Philadelphia Fed president said Monday that investors should probably expect only one interest rate cut this year.
“If everything goes as projected, I think one rate cut would be appropriate by the end of the year,” Harker said, outlining his view that he sees economic growth slowing but above trend, a modest rise in the unemployment rate, and a “long slide” back to target inflation as the base case.
Euro stabilizes after political losses
fell 0.1% to 1.0724, with the euro stabilizing somewhat after sharp losses last week as a result of political turmoil following the rise of far-right parties in European Parliament elections and the announcement of early elections in France.
“Vacations in options positioning and undervaluation of EUR/USD suggest that if markets reduce the political risk premium, the pair has significant room for recovery,” ING analysts said in a note.
“However, we doubt this can happen before the first round of French parliamentary elections on June 30, and the euro should remain a laggard in any negative dollar performance.”
The final May figure for the eurozone will be released later in the session, with the annual rate expected to be confirmed at 2.6%, up from 2.4% in the previous month.
fell 0.2% to 1.2679 ahead of the release of the May UK consumer price index on Wednesday and the Bank of England policy meeting the next day.
Inflation is expected to fall to the bank’s 2% target for the first time in nearly three years, but core inflation is expected to remain above 3%.
Rates are likely to remain unchanged as markets are now pricing in around a 40% chance of a quarter-point move in August and a 70% chance in September.
Australian market stable after RBA rates remain unchanged
In Asia, shares traded 0.3% higher at 158.16, with the yen still weak after rates held steady last week, and said it would only give clear signals of its plans to begin tapering bond purchases at its July meeting. meeting.
traded little changed at 7.2561, although down slightly to 0.6611, despite the Reserve Bank of Australia expected to keep interest rates steady on Tuesday.