The U.S. dollar remained steady on Tuesday morning as investors await the latest U.S. consumer price index data as well as the final Federal Reserve policy meeting of the year. The dollar index stood at 104.93 at noon, down from the 20-year peak of 114.78 that it hit in late September.
Economists polled by Reuters expect the consumer price index to be 7.3% higher than last year, while core inflation is expected to rise marginally by 0.3% on a month-to-month basis.
Should such projections hold true, many investors would hope for the Federal Reserve to ease its tight monetary policy. Chris Turner, global head of markets and regional head of research for UK & CEE at ING, believes that it will take more than a single month’s slowdown to convince the central bank to ease its policy.
“Our view is that the Fed are going to need to see several months of soft inflation data before they can signal the all clear,” Turner commented.
The dollar’s largest daily drop in 2022 as well as its highest gain both occurred on days when the U.S. Consumer Price Index was released. While the dollar has strengthened ahead of interest rate hikes, it has lost ground due to concerns of selloffs when inflation cools down.
