The dollar remains volatile as US inflation data approaches

7 Aug 2023 , 10:50 AM

The mixed U.S. jobs report gave little directional conviction, and as market attention shifted to inflation data from the two largest nations in the world due this week, the dollar was under pressure.

According to figures released on Friday, the U.S. economy created fewer jobs than anticipated in July, but it also saw strong pay growth and a decrease in the unemployment rate.

The report indicated a still-tight employment market, suggesting the Federal Reserve may need to keep rates higher for longer, even if the dollar dropped to a one-week low versus a basket of currencies in the wake of the news.

The U.S. dollar index was last trading at 101.98, not far from the low of 101.73 set on Friday.

The euro fell 0.01% to $1.1010 while the pound increased by 0.04% to $1.2756.

On Thursday, the United States will release data on inflation. It is anticipated that core inflation increased 4.7% annually in July.

The July inflation print for China is also coming this week on Wednesday, and traders will be watching for any new indications of deflation in the second-largest economy in the world.

The offshore yuan last traded slightly lower against the dollar at 7.1901.

In a press conference held by the state planner on Friday, a Chinese official stated that the country’s banking system’s liquidity would be kept reasonably ample, but investors were left wanting more in light of Beijing’s gradual rollout of support to revive its economy.

The New Zealand dollar increased by 0.18% to $0.6109, while the Australian dollar moved up 0.1% to $0.6577.

Early Asian trading saw the yen reach a one-week high of 141.52 to the dollar.

According to a summary of thoughts released on Monday, the Bank of Japan discussed the increased prospects of prolonged inflation during their July meeting, with one board member stating that wages and prices could keep increasing at a speed ‘not seen in the past.’

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