This is what you need to know to trade today Wednesday July 14:
The dollar is holding on to its gains related to strong US inflation and a soft bond auction. Fed Chairman Jerome Powell is open to comment on recent events. After the RBNZ sent the NZD higher in talks about reducing bond purchases, the BoC is ready to move on. The Delta variant of covid and the US infrastructure talks are also in the spotlight. Cryptocurrencies are falling from China’s crackdown.
The US inflation continues to rise: The headline CPI consumer price index shot up to 5.4% and the core CPI to 4.5%, both above expectations. The USD responded positively, but later pulled out, as details revealed that the main drivers were components related to the reopening, such as used vehicle prices, car rentals, airfares and similar items.
See: Quick Look at US Inflation: Dollar Selling Opportunity? Fed May Ignore Used Vehicle-Driven CPI
The dollar got a second boost after investors showed little appetite to buy 30-year Treasuries at auction, which boosted yields. The 10-year benchmark is above 1.40%. US producer prices will come out later in the day.
Jerome Powell,Chairman of the Federal Reserve, will testify later on Capitol Hill and could provide more insight into the central bank’s intentions to cut the bond-buying program amid rising inflation. His colleagues said the economy has not yet made “substantial subsequent progress” – referring to the labor market – toward its goals.
See: Powell Preview: Three Reasons to Expect the Fed Chairman to Lower the Dollar
CongressWhile a bipartisan group of lawmakers agreed to spend on an infrastructure bill, they are still working on how to fund it. In parallel, Democrats are discussing going it alone.
The Reserve Bank of New Zealand It surprised the markets by stopping its buying plan next week, a more optimistic than expected result. Analysts expect the RBNZ to raise interest rates as early as August. The NZD / USD shot higher and recovered the 0.70 level.
The Bank of Canada It will also announce a reduction of its C $ 3 billion / week bond purchase program, but the new levels are unclear. USD / CAD is hovering around the 1.25 level. WTI crude has stabilized around $ 75.
See: Bank of Canada Preview: QE Gradual Will Pave Way for Stronger CAD
The EUR/USD it is capped below 1.18 after the dollar storm and as Europe grapples with rising coronavirus cases. Vaccination rates have increased in France following the guidance that it would be mandatory for certain activities. Spain, the Netherlands and Portugal have suffered the highest incidence rate in recent days.
The GBP/USD it is hovering above 1.38, weathering some of the dollar’s strength as the UK prepares to reopen on July 19 despite elevated infection levels.
The AUD/USD is under pressure from Sydney’s decision to extend its lockdown as covid continues to spread in Australia’s largest city.
The cryptocurrencies They are on the defensive, with Bitcoin dipping below $ 32,000 and Ethereum dipping below $ 1,900 after Anhui province joined others banning mining of digital assets.
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