US dollar stable as markets await inflation data and global rate moves – London Business News | Londonlovesbusiness.com

The U.S. dollar remained relatively unchanged, with increased volatility expected ahead of today’s U.S. inflation data release.

This data will provide crucial insights into the Federal Reserve’s policy outlook and could spark near-term fluctuations in currency markets.

Inflation is projected to rise to 2.7%, but stronger-than-expected results could delay the Fed’s planned interest rate cuts, potentially extending the dollar’s recent rally.

Conversely, softer inflation figures would likely reinforce expectations for a 25 basis point rate cut, placing downward pressure on the greenback. U.S. Treasury yields stabilized and could also react strongly to the inflation data release. 10-year US Treasury yields rebounded this week but were muted today before inflation figures and could support the dollar if they rise.

Traders are also closely monitoring central bank decisions from major economies. The European Central Bank and the Bank of Canada are expected to announce rate cuts this week, potentially driving the respective currencies down against the U.S. dollar. However, speculation about an imminent rate hike from the Bank of Japan could limit near-term gains, as traders could shift flows toward the yen.