The dollar is poised to gain in the week ahead of Investing.com’s key inflation release

Investing.com – The U.S. dollar edged up slightly on Friday and was on course to end a five-week losing streak ahead of the release of key inflation data.

At 04:00 ET (09:00 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1 percent higher at 101,314 after climbing to an all-time high August 22 level at 101.58 on Thursday. .

Current dollar for weekly earnings

The dollar is on track to gain 0.6% this week, which would be its best week since early April, helped by persistent signs of US economic resilience after gross domestic product data showed the economy increased more than originally estimated in the second. quarter.

However, the US currency is still set for a fall of around 2.5% in August, which would be its worst month since November, as traders factored in the fact that the Federal Reserve is starting a rate-cutting cycle.

Speaking at the Fed’s annual meeting last week, Fed Chairman Jerome Powell acknowledged recent progress on inflation and said “the time has come for policy to adjust.”

That was seen by markets as warranting a rate cut at next month’s policy meeting, which would be the first such cut in more than four years.

However, debate remains over the size of the cut, as well as the pace of future cuts.

the Federal Reserve’s preferred measure of inflation, will take place later in the session and could provide more information to this debate.

Euro zone inflation is cooling

In Europe, it traded 0.1% higher at 1.1092 after August’s euro zone consumer inflation release confirmed signs of a slowdown in inflation.

rose 2.2% on an annual basis in August, down from 2.6% the previous month and a monthly gain of 0.2%.

Interest rates began cutting in June, and a sharp drop in inflation could prompt policymakers to cut again next month.

gained 0.2% to 1.3188, near its strongest level since March 2022, boosted by expectations that the Bank of England will keep interest rates higher than in the United States and the euro zone.

Cut rates by 25 basis points on August 1 to 5% and price money markets with another 40 basis points of cuts by the end of the year.

Yen near recent highs

In Asia, it settled at 145.01, close to lows hit in early August during the peak of pro-yen trading.

Data from Tokyo showed inflation rose slightly more than expected in August, with core inflation returning to the Bank of Japan’s annual target of 2 percent amid an improvement in private spending.

The reading promoted the idea that rising inflation will give the BOJ more room to raise interest rates this year. The CPI reading also helped markets look past disappointing industrial production and retail sales prints.

traded 0.1% lower at 7.0907, falling to its lowest level since late December.

The yuan, along with broader Chinese markets, was supported by news that Beijing planned to refinance $5.4 trillion in mortgage loans – offering a boost to the housing market, which is at the heart of China’s economic downturn.