The US dollar is trading flat as the European session gets underway this Thursday
The US dollar is trading flat as the European session gets underway this Thursday, with investors focused on the release of US inflation data later today. This promises to be quite a momentous occasion, as these numbers may hold the key for the performance of the US dollar, and also provide direction for the wider financial markets. A lower-than-expected CPI reading, which in this case will be anything less than eight percent, may allow the Fed to take the foot off the accelerator of monetary policy tightening. Such a scenario could create scope for a softer dollar and allow a recovery in risk appetite in the markets. On the other hand, should US inflation surprise to the upside, the Federal Reserve will be unlikely to deviate from its current path of hiking rates and reducing the balance sheet, in which case further dollar gains can be expected.
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