The US dollar strengthened against the pound to a three-week high but isn’t doing so well against other currencies after hitting an eight-week low against the Japanese yen. Continuing tensions between the United States and North Korea led investors to look for assets viewed as less risky and yen is historically the one markets look to. There is speculation that North Korea is considering firing missiles near Guam, a US Pacific island territory. Let’s hope that proves false.
The dollar has also weakened after news that producer prices unexpectedly fell in July, recording their biggest drop in nearly a year. This suggests a further moderation in inflation that could persuade the Federal Reserve to resist an interest rate hike before the year is out.
Today sees inflation data from the US in the form of CPI. This is expected to be 0.2% and will be watched closely after yesterday’s producer prices data.
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