Dollar falls after surprising data.. Will it change course today? Powered by Investing.com

Investing.com – The U.S. edged lower in early European hours on Thursday, extending lower after weaker-than-expected U.S. inflation raised expectations of an early end to monetary tightening by the Federal Reserve.

At 11:55 AM ET, the greenback, which tracks the greenback against a basket of six other currencies, fell -0.25% to 99.945, down about 1.2% on Wednesday, the biggest decline since November and the lowest since April 2022. .

Weak US CPI release hits dollar

The dollar has been weak for a few weeks, but saw its worst session in five months after the greenback fell 3% in June, down a full percentage point from last month, hitting 0.2% in June against market expectations of 0.3. %

A meeting later this month raised expectations that a 25bp rate hike would be the last, allowing the US economy to “softer ground”, increasing risk appetite at the expense of the dollar. Analysts at Goldman Sachs said in a note that the inflation report result was “consistent with our view that central bank tightening is in its final round.”

Sterling rose despite shrinking GDP

It rose 0.2% to 1.3013, despite data showing the UK economy contracted in May, raising the possibility of a recession later in the year.

The country shrank 0.1% in May compared to April, after growing 0.2% in the previous month, better than the expected 0.3% contraction. However, despite these weak numbers, the UK is expected to continue its tight cycle when it holds its next meeting, with the UK running at the highest rate of any major economy.

The European Central Bank publishes policy minutes for June

It rose 0.2% to 1.1149, hitting a 15-month high, confirming 4.5% in June, up from 5.1% in the previous month.

The ECB will post from its June policy meeting later in the session, but its officials have made clear that another rate hike is on the way this month, so the meeting is unlikely to have much impact.

Elsewhere, it fell 0.1% to 138.31, with the yen trading at a two-month high against the dollar, while the risk-sensitivity index edged up 0.6% to 0.6830, while the {{2111|currency pair against the US dollar}} traded unchanged at 7.1659, notably the yuan. Undercut by disappointing data.