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Forex This Week: Inflation and consumption differentials, Delta variant to catch market attention

7/9/2021 3:28:00 PM GMT Core Consumer Price Index (Tuesday, 12.30 GMT) rose in June above 4%, it could push the Federal Reserve to tighten its policy sooner rather than later, beginning by printing fewer dollars. A taper of the bank s bond-buying scheme could benefit the US dollar and put pressure on most major currencies and gold. On the other hand, inflation may have peaked last month – perhaps due to diminishing base effects, the sharp fall in prices seen in the spring of 2020. In that case, the Fed would feel comfortable purchasing $120 billion in bonds for longer. On Wednesday, investors will also eye the UK Consumer Price Index (0600 GMT) data for June. Inflation surprised to the upside in May with a jump from 1.8% to 2.1% YoY. Nevertheless, that figure was driven higher by base effects – the fall in prices that time last year. Moreover, the BOE s dovishness also implies inflation is unlikely to surge, which keeps the GBP capped.

GBP/JPY: Off intraday low to aim for 155 00, UK CPI in focus

5/19/2021 12:33:21 AM GMT | By Anil Panchal GBP/JPY prints four-day uptrend following the recent bounce. UK-Aussie trade deal, bullish BOE battle covid woes in Japan and Britain. Risk tone remains sluggish ahead of UK CPI, US FOMC minutes. Japan Industrial Production for March can offer immediate direction. GBP/JPY picks up bids to 154.60, up 0.05%, amid the initial hour of Tokyo trading on Wednesday. The cross-currency pair recently benefited from the UK’s trade deal with Australia and the Bank of England (BOE) policymakers’ bullish bias. However, the risk-off mood ahead of the key UK Consumer Price Index (CPI) for April tests the bulls of late.

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