Investing.com – The U.S. dollar stabilized near a seven-week high on Thursday ahead of a major inflation report, while the euro languished near recent lows.
At 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading largely unchanged at 102.684, near a seven-week high earlier this week.
CPI data is big
The dollar is trading in a tight range on Thursday but remains elevated in the wake of Friday’s strong report, which prompted the market to largely rule out the chance of another 50 basis point cut in November.
The September Fed meeting showed that policymakers fully supported the central bank’s 50 basis point cut at the time, but also remained unconvinced about the pace of future easing.
“If you read through the September FOMC minutes, there didn’t seem to be a sense of urgency from the Fed to cut rates — even though it cut rates by 50 basis points,” ING analysts said in a note. “More of a sense that inflation fears were over, unemployment was rising and a risk management approach required a policy recalibration.”
The focus was squarely on interest rates later in the day, which will likely play a role in the Fed’s rate plans. The figures are expected to show that headline CPI inflation declined slightly, while core CPI remained stable.
Traders were pricing in a 79.5% chance of a 25 basis point cut in November, and a 20.5% chance of a hold.
German retail sales are rising
In Europe, it traded largely unchanged at 1.0939, after rising 1.6% month-on-month in August, a small improvement on the previous month’s 1.5% gain.
However, this good news was tempered by the German government downgrading its growth forecast for 2024, with Economy Minister Robert Habeck predicting late on Wednesday that gross domestic product in the euro zone’s largest economy would contract by 0.2% this year, compared with with a previous forecast of 0.3% growth. .
This would mean that Germany is expecting a two-year recession for the first time in almost twenty years.
It will meet next week and is expected to ease policy again after interest rates have already been cut twice this year.
rose 0.1% to 1.3081, ahead of the release of the Bank of England’s latest credit conditions survey, as traders look for clues about the likely path of central bank rate cuts going forward.
The Japanese yen is having a hard time
fell 0.1% to 149.13, after reaching a high in more than two months.
The Japanese currency received little support from stronger-than-expected producer prices, as markets expected the Bank of Japan to face difficulties in raising interest rates further.
fell 0.1% to 7.0771, with the yuan erasing recent weakness as traders looked for more stimulus from Beijing to support growth.
China’s Finance Ministry said it will hold a briefing on Saturday to outline plans for fiscal stimulus, after a series of recent monetary stimulus largely disappointed markets.
