By Pietro Nurse
Investing.com – The US dollar rose higher early in European trade on Wednesday, stabilizing after overnight losses amid uncertainty over the US mid-term election and ahead of key inflation data at the weekend.
At 9:50 am, the index, which tracks the greenback against a basket of six other currencies, was trading at 109.625, up 0.1%, after losing about 1% since the beginning of the week.
The results of the mid-term elections in the United States are still uncertain, with Republicans appearing headed for the acquisition of the House of Representatives. However, the Senate race seems too close to be pronounced at this point, with many of the more competitive races still undecided.
“A Republican victory in one of the US chambers and the resulting stalemate could pose a challenge to continued fiscal stimulus and also raise the prospect of clashes over government funding timing and the US debt ceiling,” analysts said. HSBC (LON 🙂 in a note.
“But these are questions for 2023. The most immediate angle for the markets is whether election results are actively contested, a potential concern for acceptance of the results. [présidentiels] of 2024 “.
Thursday’s crucial data on US consumer inflation should show that the annual CPI figure dropped to 8.0% in October, from 8.2% the previous month, while the base figure, which excludes the volatility of food and energy prices, it should decrease to 6.5% yoy from 6.6% year on year.
The dollar has recently been under downward pressure based on expectations that the dollar will soon reduce its aggressive bullish cycle, potentially as early as December.
However, a surprise to the upside in inflation could likely change that mood, helping to strengthen the US currency.
it fell 0.1% to 1.0068 as the European Central Bank is expected to hold an apolitical meeting later in the session.
ECB policymakers have made it clear that further rate hikes are on the way, after the ECB hiked interest rates by 75 basis points late last month, even as growth in the euro zone suffers.
“I will do everything possible to ensure that the Governing Council of the ECB does not relax too soon and that we continue to normalize monetary policy, even if our measures are holding back economic development,” said Joachim Nagel, president of the ECB on Tuesday. Bundesbank.
fell slightly to 1.1532, rose 0.1% to 145.75 as the yen recently reached its weakest level since 1992 as the Japanese authorities maintained a very accommodative, although risk-sensitive monetary policy, it fell 0.1% to 0.6495.
it rose to 7.2508 as China struggled to contain its worst COVID-19 outbreak since May.
It rose 0.4% to 4.6692 ahead of the Polish central bank meeting on Wednesday amid uncertainty that rate hikes will resume after last month’s hiatus.
Economists polled by Bloomberg are divided on the issue, with 17 out of 32 forecasts indicating more or less an increase, while 15 saying the rate will remain unchanged.