Dollar softens ahead of key US inflation data
The dollar opened softer in Asia this morning based on expectations of today’s US CPI number, which is showing further moderation and reinforcing the possibility of a Fed rate cut in September. CPI is estimated to have slowed to 3.1% YoY versus last month’s 3.4% rise, while Core CPI is estimated to be unchanged at 3.4% YoY.
Bets on a September rate cut have climbed to 75% as the Fed walks a tightrope between keeping rates higher for longer at the risk of pushing the economy into a recession.
Risk sentiment has improved massively, with Wall Street, Japan’s Nikkei hitting fresh record highs, and EM currencies strengthening.
The Rand, which is currently quoted at 18.10, closed firmer for the 6th consecutive day yesterday, ending the day at 18.12. We expect the local currency to remain fairly rangebound ahead of the afternoon’s CPI and jobless claims data.
The softer Dollar and rising rate cut hopes, pushing Gold toward $2,400
Gold is trading firmer at $2,382 this morning on the back of the US rate cut expectations and the softer Dollar, while a pick-up in central bank buying of the yellow metal is further underpinning the price.
Platinum and Palladium are also firmer this morning, with both metals sitting just below the $1,000 mark. Brent crude is trading 0.75% firmer at $85.78 but still within a narrow range as traders weigh up rate cut hopes against demand concerns out of China.