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Forex Market Pressure Continues as US CPI Awaited

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  • Euro Remains Weaker Despite Bond Buying
  • Pound Also Lower Ahead of G7 Summit
  • Markets Rise Despite Hot CPI Figures

Pressures in the forex market continued for major currencies around the world against the Dollar. This shows the returning strength of the Greenback tinted with some caution from traders worldwide. The Euro showed a slight intraday spike but remained low despite supportive bond-buying measures from the ECB being set to continue. The Pound also stayed under pressure as the leaders of the world arrived in the UK for the G7 Summit that kicks off tomorrow. Wall Street meanwhile moved up again as traders digested the key US CPI figures released earlier.

PEPP Unchanged as ECB Support Continues

Striking a supportive note, the ECB has announced today that interest rates will remain unchanged. The same is true of supportive measures put in place by the Pandemic Emergency Purchase Programme which allowed for net asset purchases. These will continue in the coming quarter and remain flexible in accordance with market conditions according to the ECB statement.

This gave the Euro a boost in forex trading at least temporarily though it remains pinned down below 1.22 with the Dollar return to some degree of strength also playing a major role. Other comments from the European Central Bank include their plans to maintain interest rates at their very low levels until inflation comes in closer to the 2% target they have set. They still expect this to be at least into 2023 in a statement released today.

Sterling Struggles Continue as G7 Looms

Several factors are still weighing on Sterling as it remains around 1.41 against the Dollar with forex brokers. Chief among these is the Delta COVID-19 variant as cases continue to be an issue. There is more though with Brexit continuing to cause difficulties in the relationship between the EU and Britain in particular. All of this is happening with the G7 Summit about to take place in the UK.

The marks US President Joe Biden’s first overseas trip and he has arrived in the UK with strong words on his feelings about the need to protect peace in Northern Ireland above any other interests. The struggles remained even as US CPI figures jumped higher than expected.

Wall Street also Shrugs Off CPI Rise

A bigger than expected rise in the headline CPI number may have had the power to spook markets though this does not seem to have been the case on Wall Street as it’s very strong run looks set to continue higher despite a 5% increase in the headline CPI number, ahead of the 4.7% year on year number expected.

All the major indices started the day higher. The Dow Jones with a jump of more than 150 points. All three major indices remain close to new all-time highs with the S&P 500 closest to this landmark. While inflation fears still linger, they would appear to be put off at least for now.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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