The U.S. dollar rebounded Wednesday as U.K.’s inflation dropped to 7.9 percent in June, causing the pound to weaken against other major currencies.
The British pound declined by 0.81 percent to $1.2929 against the U.S. dollar, a low not seen since July 11, when it dropped to $1.2868. The drop followed a rise to $1.3144 last Thursday, its highest level since April 2022.
The euro strengthened by 0.59 percent against the British pound, reaching 0.8662. However, the euro fell 0.24 percent against the dollar, settling at $1.1202.
The USD/JPY pair experienced a positive increase of 0.62 percent. The yen faced downward pressure due to BOJ Governor Ueda’s indication that the BOJ will maintain its easy monetary policy until there is a change in its assessment of achieving the inflation target.
The yen’s safe-haven demand was curbed by a rally in the Nikkei Stock Index, which reached a 1-1/2 week high on Wednesday. The yen also received support from the decline in T-note yields during the same day.
The Canadian dollar showed a 0.1 percent increase, reaching 1.3160 against the U.S. dollar, equivalent to 75.99 U.S. cents on Wednesday. Throughout the trading session, it fluctuated within the range of 1.3156 to 1.3193. Last Friday, the loonie hit its highest level since September at 1.3090.
Last week, the U.S. dollar faced a significant decline following a slowdown in consumer and producer price increases throughout June. As a result, there is growing anticipation that the Federal Reserve will conclude its rate hikes after implementing the anticipated 25-basis-point increase at its meeting on July 25-26.
However, Fed funds futures traders are expecting a further tightening of 32 basis points. The benchmark interest rate is projected to peak at 5.40 percent by November.
On Wednesday, data from the United States indicated a decline in single-family homebuilding during June. However, permits for future construction surged to a 12-month high.
The increase in permits can be attributed to the severe shortage of previously owned houses for sale, driving the demand for new construction.
Other markets
On Wednesday, there was no change in the price of August gold, while September silver recorded a modest gain of 0.52 percent. The precious metals market witnessed mixed settlements that day, with silver reaching a 2-1/4 month high.
Precious metals received a positive boost due to the decline in global government bond yields, which supported their bullish momentum.
Dovish statements from the BOJ also contributed to the upward movement of precious metal prices. Ueda emphasized that the BOJ’s stance would only change if there were a shift in its assessment of achieving the inflation target.
Oil experienced a 0.5 percent decline, settling at $75.35 per barrel. This decrease came as investors decided to take profits after earlier gains, driven by tighter U.S. crude supplies and China’s commitment to revitalizing its economic growth.
At noon, Tokyo time, S&P 500 futures declined by 0.2 percent, while the S&P 500 rose by 0.2 percent. Nasdaq 100 futures experienced a 0.5 percent drop, while the Nasdaq 100 remained unchanged.
Japan’s Topix index fell by 0.7 percent. Hong Kong’s Hang Seng Index saw a rise of 0.3 percent. China’s Shanghai Composite Index recorded a 0.2 percent decline. Australia’s S&P/ASX 200 Index remained unchanged.