US Dollar Upside Potential Rises Ahead of US Inflation Data
The US Dollar is expected to remain on a strong footing ahead of the release of January inflation data. Investors are closely watching this report as it could provide insight into the future direction of monetary policy and currency markets. The FX market has become increasingly nervous in recent days, with upside risks for the dollar dominating sentiment.
Economists at Commerzbank have stated that they expect these positive trends to continue in the near term, despite some volatility around today’s announcement. They believe that any potential downside risk from higher-than-expected inflation numbers will be offset by other factors such as increased consumer spending and government stimulus measures which should support economic growth going forward.
In addition, expectations are high that further progress toward vaccine rollouts will help boost global demand for US Dollars over time due to its status as a safe-haven asset during times of uncertainty and crisis. This could lead to a further appreciation against other major currencies such as Euro or Japanese Yen if investors decide to move their funds away from those economies where there is greater risk associated with them currently due Covid-19 related issues. Ultimately though, only time will tell how much impact today’s inflation data has on currency markets but one thing is certain – investors need not fear too much volatility around this particular event given current market conditions.Read more at FXStreet