020 7898 0500Yesterday, the US dollar held as strong as it could following data that showed a faster-than-forecast increase in domestic consumer prices in August. US consumer prices accelerated in August amid a jump in the cost of gasoline and rental accommodation – signs of firming inflation that could encourage further monetary policy tightening from the Federal Reserve this year.
The Labor Department said its Consumer Price Index rose 0.4% last month after edging up 0.1% in July. Economists had forecast the CPI rising 0.3 % in August. This could help support the belief that there could be a third interest rate hike from the US this year in December.
The next key landmark for the US is the Federal Reserve’s FOMC meeting next Thursday. This will be watched closely for any signs of the interest rate hike expectations. Other data showed a strong employment situation in the US with a reduction in the number of filings for unemployment. However, despite this positive news, the dollar spent the second half of the day on the back foot against the pound after the Bank of England talked of possible interest rate rises in the ensuing months.
Today sees Core retail sales figures from the US, the only bit of major data.
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business trader on 020 7898 0500 or your Private Client trader on 020 7898 0541.
