Dollar On The Back Foot As Investor Risk Appetite Jumps

Updated:

The US dollar (USD) lost more ground on Thursday after traders became more attracted to risk on bets of more aggressive US Federal Reserve rate hikes, following the release of better-than-expected inflation data by the Labor Department yesterday.

The dollar recovered some ground in the North American session today, as the US Dollar Index (DXY) traded at 105.00. This comes after the DXY suffered a 1% drop, its highest daily loss in five months, on Wednesday

Yesterday’s US Consumer prices remained unchanged in July, Month-on-Month (MoM), after jumping by 1.3% in June. Commenting on the latest developments, currency analysts at Commerzbank said in a note: “Yesterday’s data gave hope that inflation has peaked and the Fed will need to raise rates less sharply to keep inflation under control.”

Traders cut down on previous bets that the Fed would raise rates by 0.75% for the third consecutive time in its September policy meeting, as expectations of a 0.50% increase seem more like the case. Meanwhile, Fed officials are trying to dispel beliefs that the bank could loosen its policy anytime soon, with Neel Kashkari telling the press yesterday that the apex bank was “far, far away from declaring victory” on inflation.Strong US Dollar and milder Risk Makes AUD/USD Prone

Currency analysts at MUFG said in a note: “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.”

Dollar Loses To Other Currencies Following Better-Than-Expected Inflation Numbers

The Japanese yen (JPY) and euro (EUR)benefitted the most from the dollar’s weakness, with both currencies building on gains recorded yesterday. The British pound (GBP) traded at neutral levels against the dollar after recording a solid performance the day before.

 

You can purchase Lucky Block here. Buy LBlock

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
9.8
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit
9.8

Highly volatile unregulated investment products. No EU investor protection.

  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
8.5
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.