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Currency Market Analysis

Jun 28, 2021 | Currency Market Analysis

Global Themes

USD falls as inflation fears cool

The USD fell on Friday after a miss in the all-important US PCE inflation reading cooled recent market fears.

The US’s personal consumption and expenditure reading rose by 0.5% in May in a result that just missed forecasts for 0.6%.

However, in an environment that has become used much higher inflation results, Friday’s small miss was enough to calm markets.

The annual result, at 3.4%, was the highest since April 1992, illustrating the recent rapid rise in price pressures.

The USDSGD fell 0.2%.

Aussie hit

The Australian dollar started the new week and under pressure as the economic impact of Sydney’s two-week lockdown, and what it might mean for next week’s Reserve Bank of Australia meeting, hit the currency.

This morning’s losses saw the AUDUSD fall from the ten-day highs achieved on Friday.

The GBP was lower last week as the Bank of England gave a more cautious view of the UK economy and maintained current policy settings.

Fed in focus

US Federal Reserve commentary remains in focus with Federal Reserve of New York president John Williams speaking tonight.

Chinese activity data and European inflation numbers are due on Wednesday while the critical US non-farm employment figures are released on Friday.

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