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Aug 11 - 09:55 AM

USD: Inflation Data Curtailed USD Demand But Unlikely To Prompt Much Further USD Selling - MUFG

By eFXdata  —  Aug 11 - 09:06 AM

MUFG Research discusses its reaction to yesterday's US inflation print for the month of July.

Taking this inflation data in isolation, a 50bp rate hike in September seems more plausible. That in itself will take some of the near-term upward pressure out of the dollar. However, if the data helps fuel a rapid easing of financial conditions (S&P 500 + 2.1% yday) that could encourage renewed more hawkish communications," MUFG notes. 

"While yesterday’s data clearly reduces the risk of further aggressive Fed action (+75bps) and therefore helps curtail US dollar demand, we equally see it as unlikely that this data alone will prompt much further US dollar selling from here. 75bps vs 50bps in September is a close call," MUFG adds.

Source:
MUFG Research/Market Commentary

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