The U.S. Dollar is spiking up against all peers across the board following the release of higher-than-expected inflation in the form of Consumer Price Index figures.
Overview
June CPI came in at 1.3.% over 1.0% estimated while the year-over-year figure increased from 8.8% to 9.1%. Ultimately, this serves as evidence of the concerns voiced by the Federal Reserve in their meeting and Minutes. At the moment of writing, the buck seemed to be destined to reach new highs.
As one would expect by now, it is likely markets will receive the news with some understanding that the Fed will continue to be aggressive until they see these numbers slow down. Maybe now it will be priced in that the Fed will make a 75-basis-points increment when they meet on July 27th. Some analysts are saying it could even increase to 100.0 bps with the CPI meriting the action. We shall see just how much dollar strength can emanate from this inflationary havoc
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is hitting fresh new lows as the buck sky-rockets from the headline inflationary gauge putting more pressure on the Fed to accelerate its pace of contractionary monetary policy. With Italy going through political headwinds and the lack of clarity over how to make up for no Russian energy imports, there is not much currently that can sustain the Euro value. We shall see the limits of dollar appreciation and the impact on global growth outlooks.
CAD
The “Loonie” happens to be the only currency not sinking against the greenback as expectations of a 75-bps hike today are keeping it steady. The Bank of Canada has been the only central bank able to keep up with its U.S. equivalent in combatting inflation in a hawkish manner. If somehow today’s 10 AM meeting does not produce a statement guaranteeing willingness to stay on this hiking path, we can foresee a downward shift for CAD along with all other tenders.
