- The US dollar rallied a touch yesterday as Federal Reserve Chairman Jerome Powell said that economic data in the second quarter has given FOMC policymakers greater confidence that inflation is heading down towards the central bank’s 2% target. His comments come after the softer than expected CPI release last week, possibly paving the way for an interest rate cut in September. The central bank has held rates steady at the highest level in over two decades for about a year now, with policymakers scheduled to meet again at the end of this month although most analysts feel that the upcoming meeting is too soon to pull the trigger on a reduction in borrowing costs.
- The dollar edged higher yesterday on Powell’s comments ahead of the release of key Retail Sales data this afternoon. US consumers remain reluctant to splurge their hard-earned cash and the upcoming data will hopefully give an insight into current confidence of consumers as analysts gauge the health of the US economy. The single currency lost ground after recently rallying through the psychological 1.09 area but has so far failed to significantly breach resistance at 1.0920. The pair has drifted lower to once again consolidate in the high 1.08’s and back in a well-defined trading range ahead of the release of the German ZEW survey this morning.
- GBPUSD remains well supported after breaching its recent trading range last week after the softer US inflation report. Cable has so far failed to break the key 1.30 level, peaking at 1.2995 but still hovers around a one year high. Consolidation is expected today ahead of a plethora of UK economic data in the coming days that may influence the Bank of England’s monetary policy stance.
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