Dollar Barely Moved Against Other Main Currencies

The U.S. currency barely budged against the euro, pound, and yen on Tuesday ahead of U.S. inflation data, while the Australian dollar and Chinese yuan rose thanks to reassuring exports numbers from Beijing.

The possibility of U.S. stimulus withdrawal helped to boost the dollar in recent weeks despite a renewed rise in coronavirus cases in many parts of the world. With the U.S. consumer price inflation later likely to feed the debate, the dollar was virtually unchanged against the euro. The greenback stood at $1.1856 after its more than 2% rise against the euro over the last month.

Beyond U.S. inflation numbers later, further tests loom for the greenback with Fed head Jerome Powell testifying before Congress. Other Fed officials Neel Kashkari, Raphael Bostic, and Eric Rosengren will testify before Congress on Tuesday.

Economists expect the U.S. CPI to have risen 0.5% from May as well as 4.9% from a year earlier. Traders think a miss on either side could move the greenback and the bond market by altering expectations on interest rates.

Central banks around the globe are becoming increasingly more hawkish at the moment, with several exceptions. The European Central Bank has no intention to change its position. The central bank is preparing new “forward guidance”, which will take into account a newly-tweaked 2% inflation target.

The Australian dollar and other currencies

In early London trading, the Japanese yen stood at 110.35 per U.S. dollar. The Swiss franc was stable at 0.9146 per dollar, close to its best level in a month. The Australian dollar advanced slightly to $0.7490 and the British pound was at $1.3875.

Elsewhere, China’s yuan rose to a near one-week high after surprisingly strong data helped to ease fears about a slowdown. Exports in dollar terms jumped 32.2% in June from a year earlier, compared with 27.9% growth in May.

Traders also keep a close eye on New Zealand. The inflation data is due on Wednesday. The central bank will meet for the first time since a strong business survey triggered swaps markets to price in rate hikes beginning as soon as November. The country’s central bank is not expected to change its policy or publish forecasts. Nevertheless, a guidance tweak is possible.

The New Zealand dollar added 0.1% to $0.6993, just below its 20-day moving average.