The US dollar is stable against the euro and the pound sterling in trading on Tuesday, strengthening slightly against the yen.
Traders this week are focusing on meetings of several major global central banks, including the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England and the Swiss and Norwegian central banks.
The vast majority of experts expect the U.S. Central Bank to slow the rate hike in December after increasing it by 75 basis points (bps) at the end of the previous four meetings. The rate is expected to be raised by 50 bps to 4.25-4.5% at the Dec. 13-14 meeting.
On Tuesday, the U.S. Department of Labor will release November data on the country’s consumer price dynamics, which will allow investors to make predictions about how high the Fed’s rate cap will be in the current hike cycle.
Experts, according to Trading Economics, on average expect the rate of inflation in the United States to slow to an annualized rate of 7.3 percent last month, down from 7.7 percent in October. Core inflation, which excludes food and energy prices, is expected to slow to 6.1% in November from 6.3%.
The inflation data are even more important than the Fed’s decision, said Xi Qiao, managing director of UBS Group AG’s Wealth Management unit.
“The future dynamics of the U.S. central bank rate will depend on the rate of inflation whether or not the Fed slows the rate hike on Wednesday,” Xi Qiao said on Bloomberg TV.
IG Australia experts expect the dollar to decline if Tuesday’s Labor Department report shows a slowdown in U.S. inflation to 7-7.2 percent.
The European Central Bank, which meets on Thursday, may also slow the pace of key rate hikes to 50 bps after raising them by 75 bps in October and September, experts expect.
The euro/dollar pair was trading at $1.0542 as of 7:45 a.m. Ksk on Tuesday, up from $1.0539 at the close of the previous session.
The pound exchange rate by that time is $1.2274 against $.2273 the day before.
The Bank of England, like the ECB, will hold a meeting on December 15. Experts expect the British Central Bank, which raised its benchmark rate by 75 basis points in November to the highest level since 1989, will also hold a meeting. – the most since 1989, will also decide to slow the pace of the increase to 50 bps.
“We believe most Bank of England policymakers view a 75bp rate hike as an emergency move rather than the new normal,” notes BNP Paribas economist Paul Hollingsworth.
The ICE-calculated index showing the dollar’s performance against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) lost 0.12% on Tuesday, while the broader WSJ Dollar Index lost 0.03%.
The dollar-yen exchange rate rose to 137.71 yen in trading, up from 137.64 yen at the close of the previous session.
