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U.S. Inflation Data to be Released, Dollar Index Ushered in a Major Test


On Tuesday (August 10), the U.S. dollar index rose for the third consecutive day and reached its highest level in about three weeks. It hit a more than four-month high against the euro as investors further speculated whether the recent strong employment data will push the Fed to start shrinking soon. The scale of debt purchases. Spot gold fell slightly, closing at $1,728.94 per ounce. The rising dollar and U.S. Treasury yields continued to put pressure on the gold market. U.S. oil rose 3%, rebounding from the recent decline. Although the number of new crown infections has surged, there are signs that fuel demand in the United States is increasing.

The strength of the US dollar has clearly become the dominant force in market movements in the past few days. Due to the strength of the U.S. dollar against the euro and the yen, the U.S. dollar index has risen by more than 1% this month. In fact, the Euro/U.S. dollar and U.S. dollar/yen are the two most weighted varieties in the U.S. dollar index, and the U.S. dollar has risen against these two currencies for 7 consecutive trading days.

Whether the dollar can maintain its recent gains will largely depend on the US CPI data to be announced today. The US monthly CPI data plan will be announced on Wednesday at 8:30 Beijing time. The market predicts that the latest annual rate of consumer price index and core inflation will be 5.3% and 4.3% respectively. However, this time the market will pay special attention to the performance of monthly rate data.

Marc Chandler, chief market strategist at Bannockburn Global Forex, said US dollar buying has been good and has been the case since the middle of last week. The hawkish remarks of several Fed officials, coupled with the increase of more than 900,000 jobs for the second consecutive month, once again confirmed the market's speculation that the Fed will soon make a decision to reduce the scale of debt purchases. Atlanta Fed President Bostic said on Monday that the US economy is improving faster than expected, and the time for the Federal Reserve to start slowing down its bond purchase program may come soon. Investors will look for signals from the Fed at the Jackson Hole annual central bank meeting this month. They are still waiting for further economic data. The US consumer price index will be released on Wednesday.

The euro fell 0.14% to 1.1720 against the dollar, hitting 1.1710, the lowest level since March 31; let’s look at this year’s lowest level of 1.1704; the German ZEW survey found that investor sentiment deteriorated for the third consecutive month in August due to concerns about increasing The epidemic may hinder the recovery of Europe's largest economy. Chandler said that the euro is close to the key level of $1.17 against the dollar, and the next key low will be $1.16, which is the level when the preliminary results of the US general election came out in November last year.

The euro fell 0.3% to 0.84502 against the pound in intraday trading, the lowest level since February 2020.

The pound fell 0.03% to 1.3843 against the dollar; DTCC data shows that there are about 1.2 billion pounds of non-deliverable forward contracts that expire at the end of the month at the 1.3859 level.

The dollar rose 0.25% to 110.57 against the yen, and selling near the July 23 high of 110.59 slowed the gains. The dollar also rose 0.2% against the Swiss franc, continuing its recent gains.

The U.S. dollar fell 0.45% to 1.2520 against the Canadian dollar, the Australian dollar rose 0.23% to 0.7350 against the U.S. dollar, and the New Zealand dollar rose 0.24% to 0.7010 against the U.S. dollar.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

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