The main focus of the week for dollar investors came on Friday, with consumer price data coming in lower than expected. This weakened the dollar and, yet again, throws the idea of a rise in interest rates into the ring. Fed funds futures now price in a 40% likelihood that we’ll see an interest rate hike in December 2017. This led to a 16-month low for the dollar against the Japanese yen.
Further to the US’s monetary policy concerns, geopolitical tensions between Donald Trump and Kim Jong-un continue to gain media attention, adding to the uncertainty and volatility we’ve seen so far. Trump announced the military are ‘locked and loaded’ to deal with North Korea – we’ll be watching this closely throughout the week as, no doubt, the world will.
Data wise, it’s a fairly quiet start to the week for the dollar but this changes quite quickly with retail sales out for the month of July and industrial production taking centre stage in the week ahead.
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