The dollar is headed for its longest losing streak in a year, ahead of U.S. inflation statistics.
In advance of U.S. inflation statistics anticipated to suggest the ferocious rise in prices may finally be cresting, world markets were up for a fifth straight day on Tuesday.
The STOXX 600 increased by 0.2% as a result of another welcome drop in gas prices in Europe, while the 47-country MSCI world index gained a similar amount ahead of a later increase on Wall Street that is anticipated.
After German business confidence data revealed rising recession anxiety there, the yields on the euro zone bond markets dropped.
The primary event of the day will be the release of U.S. inflation statistics at 12:30 GMT, which will be used to inform the Federal Reserve meeting scheduled for next week.
The headline inflation rate is anticipated to slightly decrease to roughly 8% year-over-year, while the core rate, which excludes the more volatile components, is anticipated to increase by the same 0.3% month-over-month as in July.
According to John Hardy, head of FX strategy at Saxo Bank, “I would concentrate on the core month-over-month number for a surprise either higher or lower,” adding that Tuesday could be a crucial day for the dollar given its recent mini-crash.
Everyone is expecting a 75 basis point increase in U.S. interest rates next week, so the question is more about whether the Fed has reached its pinnacle and what will happen in the last months of the year and in 2019.
Commodity prices have significantly decreased over the past few months, which have helped calm some of the inflation fears that led major central banks to rapidly raise interest rates this year.
The main S&P 500, Dow Jones Industrial, and Nasdaq markets were expected to post increases for a fifth straight day later, according to Wall Street gauges.
Thanks to a rise of 2.7% in South Korea’s KOSPI and an addition of 0.25% in Japan’s Nikkei, MSCI’s largest index of Asia-Pacific equities excluding Japan maintained its overnight recovery from two-year lows.
