Global Currencies: Dollar rises against euro with focus on CPI, ECB; currency falls against yen

The dollar performed differently against the major currencies on Tuesday, the 10th, before the release of August inflation data in the United States, which could modulate bets on the Federal Reserve’s interest rate cut next week. The US currency rose against the euro, with the single currency pressured by expectations of monetary easing at the European Central Bank (ECB) meeting, but fell against the yen. The US currency hovered around stability against the pound.

The DXY index, which measures the variation of the US currency against a basket of strong pairs, closed up 0.08%, at 101.630 points. The dollar depreciated to 142.36 yen. The euro depreciated to US$ 1.1029, while the pound appreciated to US$ 1.3088.

The yen rallied against the dollar on expectations of a widening interest rate differential between the U.S. and Japan. “If the Fed cuts interest rates to restore stability to equity markets, it could provide support if the Bank of Japan (BoJ) moves forward,” Oanda analyst Kenny Fisher wrote in a note.

The currency held up even after reports that Bank of Japan officials see little need to raise interest rates when board members meet next week as they are still monitoring persistent volatility in financial markets, Bloomberg reported, citing people familiar with the matter.

The euro remained under pressure, failing to gain momentum after former European Central Bank (ECB) President Mario Draghi presented proposals to improve productivity. “Given the ‘sclerotic’ nature of European political decision-making, not to mention the recent hollowing out of the political center across the bloc, we have difficulty seeing how the necessary reforms can be implemented,” analysts at financial group Monex said in a note. The euro zone’s economic outlook remains bleak, underpinning the bearish view on the euro relative to many other G-10 currencies, the analysts said.

In Argentina, the blue dollar rose to US$ 1,280 for sale, according to quotes from Financial Scope. Dollar deposits in banks in Argentina have increased by 40% to $19.8 billion since Javier Milei took office in December 2023, according to Bloomberg Linea.