Choppy US dollar trading ahead of the inflation report
MUFG Research discusses its expectations for the USD reaction to tomorrow's US CPI print for the month of May.
"We think the CPI data is key and we could well get price action after that data release. Anything close to the consensus reading of 0.4% m/m on core CPI would likely drive yields further lower and in our view that could well be the catalyst for renewed USD selling," MUFG notes.
"The dollar is holding in well this week so far - close to unchanged on a DXY basis but on a closing basis, the 10-year UST bond yield is now at the lowest since 10th March, which if sustained post-CPI will become a more notable negative influence on USD performance," MUFG adds.
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