US Dollar Falls Ahead of Consumer Price Index
The US dollar fell against its major trading partners early Tuesday, except for a gain versus the yen, ahead of the release of consumer price index data for June. This change in the dollar’s value is largely due to US policy shifts and inflation readings. The market is also considering the impact of tariffs on certain countries, such as Brazil, Canada, the EU, and Mexico, and targeted products like pharmaceuticals and copper, which will keep uncertainty high.
Foreign Exchange Activity
A quick summary of foreign exchange activity heading into Tuesday showed that the US dollar against the euro (USDEUR) rose to 1.1677 from 1.1668 at the Monday US close but was below a level of 1.1695. Eurozone industrial production rose more than expected in May, while Eurozone economic sentiment improved in July, according to data released overnight. The next European Central Bank meeting is scheduled for July 24.
Currency Updates
- The US dollar against the pound (GBPUSD) rose to 1.3448 from 1.3427 at the Monday US close but was below a level of 1.3487. There are no UK data on Tuesday’s schedule, but Bank of England Governor Andrew Bailey is due to speak. The next Bank of England meeting is scheduled for Aug. 7.
- The US dollar against the yen (USDJPY) rose to 147.9188 from 147.7205 at the Monday US close and 147.2922 at the same time Monday morning. There were no Japanese data released overnight. The next Bank of Japan meeting is scheduled for July 30-31.
- The US dollar against the Canadian dollar (USDCAD) fell to 1.3685 from 1.3698 at the Monday US close but was above a level of 1.3673 at the same time Monday morning.
Economic Indicators
Canadian housing starts data for June are due to be released, followed by Canadian consumer price data for June and manufacturing and motor vehicle sales for May. The next Bank of Canada meeting is scheduled for July 30.
Conclusion
In conclusion, the US dollar’s recent fall against most of its major trading partners, except for the yen, reflects the market’s anticipation of the upcoming consumer price index data for June and the ongoing impact of US policy shifts and tariffs. As the world waits for the next moves from central banks, including the European Central Bank, Bank of England, Bank of Japan, and Bank of Canada, the dollar’s value is expected to remain volatile. Economic indicators, such as industrial production, economic sentiment, and housing starts, will also play a crucial role in determining the future of the US dollar against other currencies.
