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DXY trades lower ahead of CPI data – BBH

The DXY is trading lower for a second consecutive day near 104.842. More Federal Reserve (Fed) officials are expressing concern about labor market weakness, but this week’s developments highlight the fact that weaker data in many major economies will fuel more dovish central banks, BBH macro strategists note.

CPI data is key to setting the Fed’s short-term expectations

“The Dollar Index (DXY) is trading lower for the second consecutive day near 104.87 as markets await key inflation data. EUR/USD is trading higher near $1.0852, and GBP/USD is trading higher near $1.2875 following stronger-than-expected data and cautious comments from the BoE. USD/JPY is trading lower near 161.60.”

“The recent weakness in US data is challenging our view that the backdrop of persistent inflation and robust growth in the US remains largely in place. Indeed, more Federal Reserve (Fed) officials are expressing concern about labor market weakness.”

“However, this week’s developments highlight the fact that weaker data in many major economies will fuel more dovish central banks, underscoring that the relative story should remain supportive of the dollar. Today’s CPI data will be key in setting the Fed’s near-term expectations.”

Source: Fx Street

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