Forex

The dollar is depreciating against the euro and the pound, rising in price against the yen

During today’s trading session, the dollar is depreciating against the euro and the pound sterling, and is strengthening against the yen.

The focus of traders this week is US inflation data for August, which will be carefully assessed by the Federal Reserve System (Fed) during the September meeting. The indicator will be released by the US Department of Labor tomorrow.

The consensus forecast of experts polled by The Wall Street Journal suggests a slowdown in inflation in the country in August to 8% in annual terms from 8.5% in July.

Experts, however, consider it unlikely that even in the event of a weakening of August inflation, the Fed will refuse another rate hike by 75 basis points (bp) in September, Bloomberg notes. Last week, US Central Bank Governor Jerome Powell reaffirmed the Fed’s readiness to “act decisively” to slow down US consumer price growth.

Higher-than-expected inflation in the United States will once again push the dollar higher, economists say.

Today the euro was worth $1.0087 compared to $1.0042 at the close of the previous session. The euro was supported by hawkish statements by the head of the Bundesbank, Joachim Nagel, made on Sunday in an interview with radio station Deutschlandfunk. According to Nagel, the European Central Bank will have to continue raising key rates if the upward trend in consumer prices continues.

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Last week, the ECB raised all three key interest rates by 75 bp. and stated that he intended to continue to increase them in the next few meetings.

“This move was a clear signal and if the inflation pattern does not change, further clear steps will be required,” Nagel said. According to him, inflation in the eurozone could rise above 10% in December and begin to slow down in 2023, but will remain “at too high a level – more than 6%.”

The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), is losing 0.26%, the broader WSJ Dollar Index – 0.08%.

The dollar against the yen was 143.45 yen compared to 142.47 yen in trading on Friday.

The pound sterling at the same time was worth $1.1615 compared to $1.1589 at the close of the previous session.

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