Investing.com – The US dollar rose in early European trading on Tuesday, recovering from recent losses, while the euro fell ahead of key inflation data.
At 04:30 ET (08:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 105,700, bouncing off a one-week low set earlier this week .
Dollar gets Trump boost; Powell went to speak
Yields have risen as prospects for a second Donald Trump presidency have risen in recent days, boosted by President Joe Biden’s faltering debate performance last week and Monday’s Supreme Court ruling that Trump has some immunity from prosecution for attempting to to undo the matter. his 2020 election loss.
“It is now clear that investors have made the link between Trump and the stronger dollar. This has also been our interpretation, given the prospect of lower taxes, inflationary protectionist measures and greater geopolitical risks under Trump,” ING analysts said in a note.
There are more clues about the Fed’s future monetary policy decisions this week, starting with the Fed chairman’s speech at a European Central Bank conference on Tuesday.
The Fed’s June meetings are scheduled for Wednesday, while June data will be released on Friday and will provide more insight into the labor market – a key consideration for the Fed as it cuts interest rates.
Economists expect the U.S. economy to add 189,000 jobs in June, following a larger-than-expected increase of 272,000 the month before.
The euro is waiting for inflation to be released
fell 0.2% to 1.0716, ahead of the release of June data for the eurozone later in the session.
The headline figure is expected to grow 2.5% annually, down from 2.6% in May, while the core figure, which excludes volatile food and energy prices, is at 2.8% annually in June comes out, against 2.9%.
“That is unlikely to be enough to trigger a major repricing of interest rate expectations, but could soften the aggressive response from European Central Bank officials,” ING said.
The ECB president will make comments today at the central bank’s annual meeting in Portugal that could change future interest rate expectations.
Politics will remain in the spotlight this week after the far-right National Rally won the first round of French parliamentary elections on Sunday.
However, the chances of the Eurosceptic, anti-immigrant RN winning power next weekend remain uncertain, and will depend on political dealmaking by its rivals in the coming days.
“The relief rally in the euro after French election results were in line with expectations lost momentum yesterday, and we doubt there will be significant additional support for the single currency given the open questions ahead of the second round on Sunday” , ING added. .
fell 0.2% to 1.2627 as Britain’s general election took place on Thursday, with the opposition Labor party widely expected to return to power.
Such an outcome could mark a return to stability after severe political turbulence during the Conservatives’ 14-year rule, which would likely boost the pound.
The yen continues to fall
In Asia, it traded 0.2% higher at 161.69, with the pair hitting a nearly 38-year high, prompting more speculation about possible government intervention in currency markets.
Japan’s finance minister said on Tuesday that authorities were alert to sharp moves in the currency market, but gave no clear intervention warning.
rose 0.1% higher to 7.2714 and remained close to a seven-month high, helped by a broad shift in the central bank’s daily guidance, which analysts say signals authorities are willing to let the currency continue relax.
