Home » Bangda Asia: Powell’s dovish remarks, the dollar index closed down under pressure_Inflation

Bangda Asia: Powell’s dovish remarks, the dollar index closed down under pressure_Inflation

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Original title: Banda Asia: Powell’s dovish remarks, the dollar index closed down under pressure

Powell told members of the House of Representatives overnight that inflation has risen “significantly” and will remain high in the next few months before slowing down-but he did not say that the recent price spike is prompting central bank officials to rush to change policy. The Fed chairman attributed the high inflation figures to factors related to the economy’s reopening from the pandemic, but did not give an accurate estimate of when or to what extent price pressures will be eased. Powell’s testimony before the House Financial Services Committee on Wednesday comes at a time when inflation is both politically and economically worrying. The consumer price index rose by 5.4% in June, which was the largest increase since 2008, and the magnitude also exceeded economists’ expectations. The duration of price pressure seems to be longer than the White House or Federal Reserve policy makers expected. Powell said: “The inflation rate has risen significantly, and it is likely to remain high before it slows down in the next few months.” He explained that today’s high inflation stems from temporary data anomalies and rising prices of goods and services. Faced with supply constraints, this should be “partially reversed”, and service prices have been severely hit during the pandemic, and are currently experiencing soaring demand. He pointed out that long-term inflation expectations are still under control-this is important because the inflation outlook helps shape future price trends. Powell said that expectations “have recovered from the low point during the epidemic, and the current range is broadly consistent with the Federal Open Market Committee (FOMC) long-term inflation target.”

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In addition, the latest inflation data released by the UK on Wednesday was better than expected. In June, the consumer price index rose 0.5% from the previous month, compared with 0.2% in a Reuters survey. This is the highest increase since August 2018, higher than the 2.1% in May. The Bank of England’s deputy governor in charge of financial stability, Cunliffe, told CNBC that the UK’s inflation in June was once again higher than expected. With the reopening of the economy after the new crown pneumonia pandemic, the Bank of England is expected to have “obstacles”. The latest inflation data released by the UK on Wednesday morning was better than expected. The Consumer Price Index (cpi) rose 0.5% month-on-month in June, while the general data from a Reuters survey was 0.2%. This is the highest increase since August 2018, higher than the 2.1% in May. The Bank of England predicts that as the economy rebounds from the historic recession in 2020, the inflation rate will reach a peak of more than 3% before the end of the year, but this will be temporary and does not require a strong monetary policy shift. Cunliffe told CNBC’s Joumanna Bercetche: “People shouldn’t expect economic reopening to be smooth sailing. This is not something you can close and reopen without any hindrance.”

The data that needs attention today are Australia’s June seasonally adjusted unemployment rate, China’s second quarter GDP annual rate, the United Kingdom’s May three-month ILO unemployment rate, the United Kingdom’s June unemployment rate, the United States’ June import price index monthly rate, and the United States as of 7 The number of people claiming unemployment benefits and the monthly rate of US industrial output in June of the week.

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Dollar index

The US dollar index fluctuated down yesterday, giving up most of Tuesday’s gains, and the spot exchange rate was trading around 92.40. In addition to profit-taking, which constitutes a certain amount of pressure on the exchange rate, the dovish remarks made by the Fed Chairman Powell during the time the market has focused on cooling down the Fed’s interest rate hike expectations are the main reasons for the pressure on the dollar index to fall. Powell said that it is not yet time to withdraw from the stimulus policy. However, the strong CPI data of the United States and the good PPI data of the United States during the period have limited the room for the exchange rate to fall. Today, we are concerned about the pressure situation near 92.80, and the bottom support is near 92.00.

EUR/USD

The euro fluctuated upward yesterday, regaining the 1.1800 mark, and the spot exchange rate was trading near 1.1840. In addition to short covering which constitutes a certain degree of support for the exchange rate, the fall of the US dollar index after the Fed Chairman’s dovish remarks cooled the Fed’s interest rate hike expectations is the main reason for the euro’s rebound. In addition, the decline in U.S. bond yields also supported the exchange rate to a certain extent. However, the risk aversion inspired by the surge in cases of public health incidents in many European countries limits the room for the exchange rate to rebound. Pay attention to the pressure near 1.1950 today, and support below 1.1750.

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GBP/USD

The pound fluctuated upward yesterday, and the daily line closed up slightly, and the current exchange rate was trading at around 1.3840. In addition to short-covering and technical buying around the 1.3800 mark that have formed a certain degree of support for the exchange rate, the weakening of the US dollar index under the pressure of the dovish remarks of Fed officials is the main reason for the rebound of the pound. In addition, the strong performance of the CPI announced by the United Kingdom during the period also provided some support to the exchange rate. Today, we are concerned about the pressure situation near 1.3950, and the bottom support is near 1.3750.

Source: Financial World NetworkReturn to Sohu to see more

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