The US dollar is trading in a narrow range against major peers as investors await producer and consumer price prints later today along with the Federal Reserve minutes. Markets are looking for clues on what is still a knife-edge situation for the next meeting and whether to expect a hold or a hike.- Last night speeches among Fed members have been inconsistent, with Atlanta’s Raphael Bostic suggesting that the current policy is sufficient to get inflation back to its 2% target and, on the other hand, his Minneapolis colleague, Neel Kashari, stated that he is not convinced yet that the latest surge in yields is enough to tame any further rate hikes.
In Europe, 1 and 3-year CPI expectations are due today and investors are keen on this data as it will have implications on the ECB’s monetary policy down the line. Germany Harmonized Inflation YoY came in line with expectations at 4.3%.- The Euro currently hovers around the 1.06 level against the greenback, but trading in a tight range and any move much higher should be short-lived. Next key resistance around 1.0650.
The BOE may need to lift interest rates at least once again and leave them at a high level for most of next year, according to the IMF assumptions. Sterling was lifted on this news, currently trading near the 1.23 level against the US dollar. Against, the Euro, has also gained, with the pair currently trading around 0.8635.
Chinese government bonds have seen their yields rise on reports that policymakers are considering fiscal stimulus. Both onshore and offshore Yuan are little changed, with USD/CNY at 7.2940 and USD/CNH at 7.2908.
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