US recap: EUR/USD extends bounce as dollar's rate woes grow
Dollar dip buyers show resilience vs yen, 55DMA limits downside
AUD/USD-US yields, inflation data give bulls the advantage
July 12 (Reuters) -The dollar fell broadly on Friday as U.S. rate-cut fever, which took hold following this week's unexpectedly soft CPI report, proved unbreakable even after surprisingly strong producer price inflation.
Below-forecast University of Michigan consumer sentiment, along with diminished inflation expectations in that report, underpinned the newfound enthusiasm for Fed rate-cut bets.
The recent dollar retreat has allowed EUR/USD to erase the fall it took last month as it tests June's high of 1.0916. Cable was probing levels from July last year and USD/JPY struck its lowest in nearly a month.
The market now foresees 63bp of easing by the U.S. central bank this year -- and 100bp by March of 2025 -- with the first move fully discounted for September and strong betting on a second in November, according to LSEG's IRPR page.
U.S. Treasury yields weakened, led by the policy-sensitive front end. Two- and three-year yields were down 4-5bp and at their lowest in four months.
The S&P 500 held onto gains of 1.09% by New York afternoon trade after hitting a record high with the help of Fed rate-cut optimism.
WTI fell 0.52%, losing earlier gains.
Copper gained 1.82% with support from a weaker dollar and hopes that the growth in exchange stockpiles could be coming to an end, though a softer demand outlook in top metals consumer China kept the metal on track for a weekly decline.
Gold was little changed on the day.
Heading toward the close: EUR/USD +0.36%, USD/JPY -0.66%, GBP/USD +0.58%, AUD/USD +0.37%.
For more click on FXBUZ
(Burton Frierson)
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