What next for the dollar? What will the week bring?

Last week's data on inflation in the United States turned out to be lower than expected, which was positively surprised by market participants. CPI inflation amounted to 3,0% y/y, and its core measure fell to 3,8% y/y. June data casts doubt on more than one Fed rate hike. Is the dollar's recent weakness exaggerated then?

Inflation is falling

General services still have a very large impact on inflation, but the greatest impact on the price increase in the economy contributes to the so-called pension equivalent. Without it, or even taking into account the average growth before the pandemic, inflation would already be at the target. Currently, the decline in inflation is mainly supported by the negative impact of energy prices. However, this effect will wear off over the next few months.

It can also be fun decline in producer price inflation – PPI fell to almost zero in June, and the core indicator is already close to the target level. However, PPI inflation does not have much room to continue falling due to oil prices, which have stopped falling so dynamically. According to Bank of America analysts, a rebound in the level of inflation may be waiting for us in the coming month, which means that the Fed continues to talk about too high inflation.

Will the Fed change plans?

But are further Fed rate hikes a realistic scenario? The market has already revised its expectations regarding further decisions of the Reserve. Currently, the Fed is expected to raise interest rates by 25 bps. in July and will keep it at the new level at least until the end of this year. However, worse data on inflation in the autumn may lead Reserve's decision makers to change their plans.

We invite you to meet the economist XTB Michał Stajniak, in which he will focus on the key topics of this week.

In today's webinar:

• US inflation below expectations
• Will the US dollar continue to fall?
• Ripple beats the SEC - what does it mean for cryptocurrencies?

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In addition, due to the very dynamic situation in the world, additional ones are available raports Video on the impact of war, pandemic and economic crisis on the global economy.

About the host

Michał Stajniak

Michał Stajniak - Raw Material Market Analyst in XTB. It places particular emphasis on the linkages between the behavior of commodity prices and the currencies of economies heavily dependent on exports of commodities such as oil, iron ore, gold and powdered milk. He is the author of frequent comments comparing commodity price indices with currency pairs such as AUDUSD, NZDUSD, USDCAD, USDNOK, or EURNOK. He represents XTB in the media (including TVN24 BIS, Polsat News, TVP Info, Bankier TV or Onet TV) and is the author of articles in the financial press such as Parkiet, Puls Biznesu and Dziennik Gazeta Prawna. He is a practitioner of the stock market and the derivative market. In his approach, he values ​​fundamental analysis above all, but often uses Fibonacci levels to determine the demand and supply zones needed in a Price Action strategy. A graduate of Quantitative Methods in Economics and Information Systems at the Warsaw School of Economics.

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