The U.S. dollar strengthened nearly across the board last night as traders positioned themselves before this morning’s inflation data.
Overview
The dollar is softening in early trading following the CPI data, however.U.S. CPI rose 0.8% in November after rising 0.9% in October. That is higher than the estimated jump of 0.7%. On a yearly basis, inflation rose 6.8% which was in line with expectations but also represents the fastest rate of inflation since 1982, according to Bloomberg Economics.The dollar is weakening a touch. The likely reason is that trader’s knee-jerk interpretation of the number if that these figures will not force the Fed to tighten at a faster rate than we expected before the print. Indeed, the amount of 2022 Fed hikes being priced in by Swaps slipped slightly over the past few minutes.Later, the University of Michigan consumer sentiment will be released but is likely to be overshadowed by the inflation print.
What to Watch Today…
- No major economic events scheduled for today
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CAD
The Canadian dollar is mostly flat this morning even as the price of oil rose. The loonie is looking to snap a streak of six consecutive losses versus the greenback. If the current rate holds, the Canadian dollar will log its biggest weekly advance since October. Rebounding energy prices are a main driver as crude prices climbed 8% this week.
GBP
The British pound weakened again and is at its year-to-date low against the greenback. The sterling has been under heavy pressure this week following the announcement of “Plan B” to combat covid. However, the pound has seen selling pressure for the better part of a month. Indeed, GBP/USD is set for a third weekly loss.
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