Dollar Rises as Traders Brace for CPI and Warsh Testimony
The USD is climbing against every major currency ahead of June CPI data and Fed Chair Warsh's Congressional testimony.
The dollar is on offense to kick off the North American session, and the trade is simple: nobody wants to be caught leaning the wrong way before June CPI drops and Fed Chair Kevin Warsh opens his mouth in front of Congress. Two massive catalysts, one session. Trim risk, buy dollars — that's the playbook right now.
The New Zealand dollar is taking the worst beating, down 0.89% to 0.5799. The kiwi got a hawkish RBNZ rate hike last week — 25 basis points to 2.50% with more tightening signaled — and rallied hard. Now the profit-takers are here. Aussie, CAD, and swissy are all bleeding too, while the euro and yen are holding up better because they're your classic funding currencies. Commodity currencies lead the pain; funding currencies absorb it.
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Here's what the CPI tape is expected to show: headline YoY at 4.2% versus last month's 3.8%, and core YoY ticking to 2.9% from 2.8%. Month-over-month headline flips from -0.1% to +0.2% expected. Fed's Waller already telegraphed Monday that another firm core print could justify another rate hike — and it'd take several months of softer readings before he'd even think about going dovish. Watch whether Warsh echoes that tone. His prepared testimony could hit the wires right as the CPI data lands.
On the equity side, it's a messy open. The Nasdaq is catching a bid while the Dow is getting dragged down — mostly because IBM is in freefall, off nearly 23% premarket after missing on both EPS and revenue. The banks, meanwhile, are printing monster beats across the board. JPMorgan, Goldman, BofA, and Wells Fargo all topped estimates on the top and bottom lines, yet most are trading lower except Goldman. Beats don't matter when macro uncertainty owns the room.
Bottom line: this session is all about the CPI print and Warsh's tone. A hot inflation number plus hawkish testimony = dollar rips higher and rate-sensitive assets get hammered. A softer read could flip the script fast. Stay nimble. Continue reading at Forexlive.
