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Weekly roundup: US dollar plummets following collapse of US consumer confidence

currency-newsWeekly roundup: US dollar plummets following collapse of US consumer confidence
The US dollar initially enjoyed strong support last week, with rising US Treasury yields and a prevailing risk-off mood bolstering the appeal of the safe-haven ‘greenback’.

However, the US dollar faced its first setback with the release of the US consumer price index on Wednesday.

July’s CPI release revealed that US inflation held at 5.4%. While this beat expectations it would slow to 5.3%, the slowing of month-on-month price growth sparked some suggestions amongst economists that US inflation has now ‘peaked’.

USD exchange rates subsequently bounced back on Thursday, as new jobless claims fell in line with expectations, whilst US producer prices rose faster-than-expected in July.

But the US dollar’s sharpest selloff was reserved for the end of the week, after the publication of the University of Michigan's consumer sentiment index.

August’s release printed well below market expectations, revealing that consumer morale in the US plunged to a near decade-low.

Turning to this week, global Delta variant concerns and geopolitical uncertainty have helped the US dollar to mount a convincing recovery in early trade.

However, the focus soon looks to turn to the Federal Reserve, with a speech from Fed Chair Jerome Powell and the scheduled release of the minutes from the US central bank’s July policy meeting.

These could see the US dollar relinquish some ground if the releases reinforce the Fed’s current dovish bias, with USD investors likely to pay particular attention to Powell’s speech for his take on the latest US inflation figures.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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