After ending with a flat performance at the end of last week, the US dollar started trading at the beginning of this week with a strengthening displayed in the European and New York sessions yesterday.
The situation was driven by expectations of an increase in the latest inflation figure in the US consumer price index (CPI) data to be published today (Tuesday).
After recording an increase that exceeded expectations in the previous month, the latest CPI figure is expected to continue to increase to 2.8% for the July reading.
This data will be an important indicator that will strengthen the picture of whether an interest rate cut will be implemented by the Federal Reserve (Fed) at its meeting next month.
The situation changed from last week with the depreciation of the US dollar where investors changed expectations for a Fed interest rate cut following the weakening report on US jobs, manufacturing and services.
Fed officials were also less than pleased with the labor market which increased the central bank's openness to further cuts at the September meeting.
In addition to the upcoming figures, investors should also be wary of the market's reaction to President Donald Trump's statements or criticism of Fed Chairman Jerome Powell, which often appear when important data is released.
As in the previous situation, Trump criticized the results of the latest FOMC meeting and again threatened to remove Powell.
When the NFP report was published in early August, Trump fired an official from the US Bureau of Labor Statistics Commission when he was disappointed with the declining employment figures.
In the Asian session this morning, investors will be waiting for the Reserve Bank of Australia (RBA) policy meeting, where interest rates will be lowered to a 4-year low, at 3.60%.
