The main focus of the market this week, the US consumer inflation data was published in the New York session yesterday, Thursday and as expected, had a major impact on the movement of the US dollar.
Analyzing the report, the annual consumer price index (CPI) for August was 2.9%, meeting the forecast to increase from the previous reading of 2.7%.
However, the US dollar weakened significantly after the data was published even though higher inflation readings usually lead to a strengthening of the currency, when investors assessed that the increase did not bring a new signal about the direction of monetary policy.
The market now sees that the central bank has approached the end of its policy tightening and expects easing measures to be resumed.
Thus, the Federal Reserve (Fed) is seen as almost certain to implement an interest rate cut at the FOMC meeting next week.
In addition, also of interest before the focus shifts to the US inflation data is the decision of the European Central Bank policy meeting.
As expected, the European Central Bank (ECB) decided to keep interest rates at 2.15% without giving a clear signal for further policy setting.
ECB President Christine Lagarde delivered a cautious statement with decisions to be made from one meeting to another while assessing the latest economic data available.
The Euro currency showed a modest performance following the announcement, but was significantly stronger against the US dollar which weakened in the New York session yesterday.
Focus on the end of this week, UK economic growth data will be published in the European session before the focus is on the US consumer sentiment survey in the New York session tonight.
