Dollar Falls Despite Hot Inflation
The US Dollar has come under fresh selling pressure today despite a set of hotter-than-forecast inflation data yesterday. Annualised US CPI was seen rising to 3% last month from 2.9% prior. The monthly readings were also seen rising above forecast with core rising to 0.4% from 0.2% prior, above the 0.3% market forecast. Headline monthly CPI rose to 0.5% from 0.4% prior, above the 0.3% market forecast. While USD was initially higher in response to the data as traders further pushed out their Fed easing expectations, USD was ultimately lower as news broke of a 90-minute phone call between Trump and Putin laying the groundwork for peace talks between Russia and Ukraine. Trump said that both leaders had expressed a desire for peace which the US president will now work to deliver.
Peace Talks Bearish for USD
The prospect of a peace deal between Ukraine and Russia thwarted bullish momentum in USD as safe-haven demand faded. Traders will now be closely monitoring incoming news flow for any further developments. If concrete steps are taken soon USD is likely to continue to weaken as risk appetite improves, diverting attention away from USD for now. Looking ahead today, traders will be watching the latest set of US PPI readings, expected to lift in line with what we saw in CPI yesterday. However, given the impact of the Russia/Ukraine peace story, market impact is expected to be muted with traders now waiting for further updates on expected talks.
Technical Views
DXY
For now, the market remains within the 107.24 – 109.35 range with momentum studies having trailed off, reflecting the lack of direction. Current selling suggests downside risks are building and if price breaks below range support, 105.97 and 104.59 will be the next support levels to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.