Investing.com – The US dollar held steady at high levels on Tuesday ahead of the release of a set of key economic data this week, while the Japanese yen remained near a three-month low on political uncertainty.
At 05:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading slightly lower at 104.122 but poised for a 3.6% gain for the month, the best performance in the past month. over 2 years.
A data flood threatens
The dollar has been boosted lately by a series of economic data releases that point to the underlying strength of the U.S. economy, leading investors to price in a slower rate of interest from the Federal Reserve than previously thought likely.
However, traders appear reluctant to take new positions at the moment, with the week littered with major data releases.
September data will be released later in the session, with US data due on Wednesday. But most eyes will be on the September US price index – the Fed’s preferred inflation measure – on Thursday, followed by the monthly index on Friday.
Another factor boosting the dollar was rising confidence that Republican candidate Donald Trump will win next week’s US presidential election.
Trump’s policies on tariffs, taxes and immigration are seen as inflationary and therefore positive for the dollar.
German consumer confidence is improving
In Europe, yields rose 0.1% to 1.0817, helped by a stronger-than-expected rise in German yields, from a slightly revised -21.0 the previous month to -18.3 points.
However, Germany’s economy remains in trouble, with the German Chamber of Commerce and Industry saying on Tuesday that the eurozone’s largest economy will shrink by 0.2% this year, reversing its previous stagnation forecast published in May , was reduced.
DIHK also expects zero growth in 2025, which would be the third year in a row without real GDP growth.
The ECB has cut rates three times this year, by 25 basis points each time, and expectations are growing that the central bank will consider a bigger cut at its next meeting.
traded 0.1% higher at 1.2982, with the pound steady ahead of Wednesday’s budget, the first for the new Labor government.
According to the British Retail Consortium, annual retail price deflation in the UK fell to 0.8% in the 12 months to October, the weakest since August 2021 and a bigger fall than the 0.6% fall in September.
“Households will welcome the continued easing of price inflation,” said BRC CEO Helen Dickinson. “But this downward trajectory is vulnerable to ongoing geopolitical tensions, the impact of climate change on food supplies, and the costs of planned and delayed government regulation.”
Japanese political uncertainty
rose 0.1% to 153.38, just below Monday’s low, the yen’s weakest level since July, after Sunday’s Japanese national elections.
The election outcome heralded greater political uncertainty in the country, which could pose problems for the BOJ in further raising interest rates. Rates are widely expected to remain unchanged on Thursday.
Japanese Finance Minister Katsunobu Kato reiterated Tuesday that authorities will be vigilant against movements in the currency market, including those driven by speculators.
rose 0.2% to 7.1376, to a more than two-month high, ahead of the release of China’s purchasing managers’ index data on Thursday.
The outcome is expected to reflect some of the effects of the series of stimulus measures announced by Beijing over the past month.
