Dollar Mixed after CPI Data – 12 July 2019

The US Dollar was mixed after moving broadly higher during the Asian trading on Friday when a knee-jerk reaction to yesterday’s release of unexpectedly upbeat inflation data helped to shift investor sentiment. The US Labor Department reported that Core CPI was at 0.3% in June (month-over-month) and 2.1% (year-over-year), above the 0.2% and 2.0%, respectively, that analysts and economists had predicted. Markets are now less inclined to believe that the US Federal Reserve will cut rates as aggressively as earlier believed when they hold their policy meeting later this month.

As reported at 10:00 am (JST) in Tokyo, the USD/JPY was trading at 108.5070 Yen, up 0.0249%. The EUR/USD was trading higher at $1.1258, a gain of 0.0005%, while the GBP/USD was at $1.2532, up 0.0007%.

Policy Shift for Fed Considered

Markets had initially been expecting that the Federal Open Market Committee would cut rates by as much as 50 basis points, but today’s news has tempered expectations. Analysts believe that a cut is still likely in the works, but with 25 basis points being the more likely outcome. Analysts had long been insisting that the inflationary outlook would be weak, prompting speculation of aggressive rate cuts.

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