Dollar braced for sharp moves as pound weakens
Daily Currency Update
All eyes are on the US CPI report due this afternoon, with traders bracing for heightened volatility in the dollar and its major pairs. A stronger inflation reading could cement expectations of “higher for longer” Fed policy, driving fresh USD strength. Meanwhile, secondary data like the Empire State Manufacturing Index will likely be overshadowed by the inflation numbers.Key Movers
Meanwhile, GBP remains under pressure, extending the losses it incurred yesterday following the unexpected rise in the UK unemployment rate.The Euro is trading cautiously against the Dollar, with an earlier release of Eurozone Industrial Production data failing to provide a major catalyst. The Euro's movement is almost entirely dependent on the US CPI outcome.
The Australian Dollar is managing to hold onto some modest gains established yesterday after the Reserve Bank of Australia minutes pushed back against aggressive market expectations for imminent rate cuts. While the AUD shows relative resilience, its immediate trajectory, like the Euro's, will be dictated by the global market reaction to the US inflation figures. In summary, today is a day of consolidation and waiting, with a sharp spike in volatility expected during the North American trading session.
Expected Ranges
- GBP/USD: 1.3330 - 1.3380 ▲
- GBP/EUR: 1.1460 - 1.15 ▲
- GBP/AUD: 2.0450 - 2.0490 ▲
- EUR/USD: 1.1610 - 1.1650 ▲