Currency News: Dollar Weakens Before CPI Report, Pound Strong on GDP Data

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Key Takeaways

  • 💵 Dollar Index fell to its lowest level since mid-June at 104.552
  • 🇺🇸 Federal Reserve Chair Powell reiterated outlook for soft landing for U.S. economy
  • 📉 Upcoming June CPI release in focus, signs of easing inflation may lead to rate cut bets
  • 🇬🇧 GBP/USD rose to highest level since early March after strong U.K. GDP growth
  • 🏴 U.K. economy grew by 0.4% in May, may delay BoE interest rate cuts
  • 🇪🇺 EUR/USD rose to a one-month high amid French politics silence
  • 🇯🇵 USD/JPY traded lower with weak core machinery orders signaling Japanese economic struggles
  • 🇨🇳 USD/CNY traded lower with yuan finding slight relief after disappointing inflation data

Market Overview

The foreign exchange market saw significant movements as various factors impacted major currency pairs during the trading sessions.

Dollar Index and Federal Reserve:

  • 💵 Dollar Index fell to its lowest level since mid-June at 104.552, reflecting weakness in the currency.
  • 🇺🇸 Federal Reserve Chair Powell reiterated the outlook for a soft landing for the U.S. economy, which influenced market sentiment towards the dollar.

Inflation Outlook and Rate Cut Bets:

  • 📉 Traders focused on the upcoming June CPI release, with signs of easing inflation potentially leading to increased bets on rate cuts by central banks.
  • 📉 Odds of the Fed cutting rates in September were at 72.5%, indicating market expectations for potential monetary policy changes.

GBP, EUR, JPY, and CNY:

  • 🇬🇧 GBP/USD reached its highest level since early March after strong U.K. GDP growth, lifting the Sterling against the dollar.
  • 🇪🇺 EUR/USD rose to a one-month high amidst a lack of impactful French politics news.
  • 🇯🇵 Weak core machinery orders data in Japan contributed to USD/JPY trading lower, showing struggles in the Japanese economy.
  • 🇨🇳 USD/CNY traded lower as the yuan found some relief after underwhelming Chinese inflation data.

The currency market remained dynamic with shifting trends influenced by economic data releases and central bank statements, keeping traders attentive to potential opportunities in the forex market.

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