Dollar dips ahead of U.S. inflation data and clues from Fed

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The U.S. dollar dipped on July 13 morning in Asia morning. The decline came as investors await U.S. inflation data for indications about the likely timeline for asset tapering and interest rate hikes. Additionally, they digester better-than-expected Chinese trade data.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, declined by 0.03% to $92.227.

The dollar against the Japanese yen increased by 0.07% and hit 110.43.

The risk-sensitive currency, the Australian dollar, rose by 0.23% against the dollar to 0.7492. Meanwhile, its New Zealand counterpart gained 0.15% and hit 0.6991.

The American currency declined by 0.13% versus the Chinese yuan and traded at 6.4668. Chinese trade data published earlier in the day revealed that exports surged 32.2% year on year. Data also showed that imports rose 36.7% year-on-year, while the trade balance traded at $51.53 billion in June.

The British pound against the U.S. dollar increased by 0.06% to 1.3888. As we know, all the remaining coronavirus restrictions in the United Kingdom are likely to lift on July 19. However, England is facing a rising number of virus infections.

Investors are waiting for the U.S. CPI and PPI for June

Investors are waiting for the producer price index and the U.S. consumer price index for June. Remarkably, the dollar holds modest gains versus the pound. It rose against the Australian and New Zealand dollars and the Japanese yen ahead of the CPI’s release. Remarkably, the producer price index is due later in the week.

U.S. interest rate expectations are driving the greenback. Data shows that it has increased by almost 2% since June. As we know, the Fed surprised the market as it handed down its latest policy decision. The Federal Reserve’s projection of sooner-than-anticipated interest rate hikes in 2023 also cleared out large bets on a weakening greenback.

Remarkably, investors are increasingly shifting to longer data bonds as the global economic recovery from coronavirus also slows down.

Fed Chairman Jerome Powell will also testify before Congress on July 14 and July 15. It will be monitored for his response to the inflation figures and clues on when the central bank will start asset tapering.

Other officials, including Fed Minneapolis President Neel Kashkari, Fed Atlanta President Raphael Bostic, and Fed Boston President Eric Rosengren, will appear later on Tuesday ahead of Powell.

Remarkably, central banks will announce policy decisions during the week, including the Reserve Bank of New Zealand on Wednesday. The Bank of Korea will publish decisions on Thursday, while the Bank of Japan – on Friday.

Trading volumes at major cryptocurrency exchanges fell 40% in June

In cryptocurrencies, the dominant cryptocurrency, Bitcoin, increased by 1.11% and traded at $33,197. Meanwhile, the second-largest cryptocurrency, Ethereum, gained 0.15% and hit $2,039.69.

However, the latest data showed that trading volumes at major cryptocurrency exchanges declined by more than 40% in June.

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