On Thursday, the markets received a new blow due to uncertainty against the background of the publication of US consumer inflation data.

The data of the consumer price index presented on this day showed a growth rate of 1.6% in annual terms, as well as the June value of the index with 0.1% growth. However, the presented values of the basic consumer price index were the reason for the negative of the markets or rather the uncertainty factor in the prospects for the future monetary policy of the Fed. This reflects changes in the price of goods and services, except for food and energy. The indicator added 2.1% year-on-year, which is higher by 2.0% in June increase last year. The monthly value of the index rose even more by 0.3% in June against a rise of 0.1% in May and an increased forecast of 0.2%.

These data caused mixed feelings among investors. On the one hand, they can prevent the American regulator from actively lowering interest rates, as the risk of rising inflation will stop the Central Bank in wanting to lower borrowing costs. Ultimately, this will be the basis for sales in the local stock market and then in other global markets. Recall that the only objective factor at the moment supporting the demand for shares of companies is the expectation of lowering interest rates.

On the other hand, they may indicate an increase in demand in the country, which in general is a positive thing. Although it restrains the interest of market players in the shares of American companies, its cost and many of them are inadequately overestimated.

How can the data on consumer inflation affect the dynamics of the US dollar?

In our opinion, its strengthening will most likely be of a local nature since the US economy is experiencing a significant slowdown in growth, although not yet critical. In this situation, it seems that the Fed still has to lower rates once or twice this year by 0.25%, which will ultimately put pressure on them.

Forecast of the day:

The EUR/USD pair is trading below 1.1280. It can continue to grow only in the wake of raising investors' hopes for the Fed to lower interest rates, which will lead to an increase in demand for risky assets. In this situation, overcoming 1.1280 may stimulate the price increase to 1.1340.

The USD/CAD pair is trading below 1.3040. We consider it possible to sell the pair against the background of the local recovery in oil prices and the meeting of the Central Bank of Canada on monetary policy, which will have a positive outcome for the Canadian currency.