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The dollar was stable on Tuesday ahead of the release of the US inflation data and the last Federal Reserve meeting this year, and investors waited for an updated interest rate outlook.
US stocks rose on Monday as investors gained confidence in experts' forecasts of a 7.3% increase in the US consumer price index in November. If this forecast comes true, it will be the fifth consecutive decline and the lowest level in 11 months. Even if this would still leave inflation well above the Fed's 2% target, it may be enough justification to hold back the pace of monetary policy tightening
The rate increased slightly to 1.0543 from 1.0538. The EUR/USD daily range is 1.05281 - 1.06287
Today's data from Germany on CPI met expectations, holding the level of 10%.
Source: investing.com
The EU ZEW economic sentiment index improved to -23.6 in December from -38.7 in November, data released on Tuesday showed, but it still points to more pessimism than optimism. Thursday's meeting of the European Central Bank remains the focus of the week, at which an interest rate hike of 50 basis points is expected.
The pound was broadly stable on Tuesday as gains from the UK employment data were offset by caution ahead of a key US consumer inflation reading. Also, today's UK data could ignite the cable rally fuse should the US CPI data be bound.
The release of employment data showed that unemployment met estimates, while wages and the employment rate improved. The number of employees on the payroll increased by 107,000. to a record level of 29.9 million. The number of job vacancies recorded a fifth straight decline, reflecting the uncertainty stemming from economic pressure on recruitment. Wage growth turned out better than expected, with both total and regular wages increasing by 6.1% y/y, which is the fastest rate in history outside of the pandemic.
The forecast for core US inflation YoY is 6.1% while overall inflation YoY is expected to come in at 7.3% compared to October’s print of 7.7%.
Sterling recently rose 0.2% to $1.2296 ahead of the Bank of England's (BoE) policy decision on Thursday. Last week it hit a nearly six-month high at $1.2345.
The Bank of England meets Dec. 15, when a 50 basis point rate increase is expected.
USD/JPY hit a 32-year high of 151.95 in October, the day the Bank of Japan intervened for the second time to prevent the yen from depreciating. From this peak, the price is in a downtrend channel.
The general mood of the pair is bullish.
The Japanese yen stabilized below 138 to the dollar. Price is now approaching the upper band of the channel but is struggling to break above the breakpoint and recent high of 137.67 and 137.86 respectively.
USD/JPY Pair slipped to 137.3270 from 137.6498
In a recent announcement, Mana Nakazor, a potential candidate for Vice Governor of the Bank of Japan next year, said the central bank should change its policy statement to give itself more room to adjust interest rates.
She suggested that the Bank of Japan should "admit that interest rates may go up or down depending on economic developments" and that he should signal that "massive monetary easing will be over".
The Bank of Japan is expected to maintain its monetary policy stance at its next meeting on December 19-20.
Source: investing.com, dailyfx.com, finance.yahoo.com
