Last week, it was again confirmed that the US inflation data is the dollar’s biggest nightmare. The currency tumbled and hit a new 7-month low on Monday as investors were further convinced that the Fed may eventually need to cut interest rates at some point this year. As they seek extra validation to their view, this week, traders are likely to pay attention to the US retail sales for December and the PPIs for the month, both due to be released on Wednesday at 13:30 GMT.
Inflation data confirms rate-cut bets
Last Thursday, both the headline and core CPI rates for December declined to 6.5% y/y and 5.7% y/y from 7.1% and 6.0% respectively, matching expectations. However, what came as a surprise and perhaps prompted traders to sell more dollars may have been the monthly CPI rate.
Instead of stagnating as the forecast suggested, consumer prices declined 0.1% m/m, adding credence to the view that inflation may be on a sustained…
