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2026-07-13 18:10:10
[Mitsubishi UFJ Warns Dollar Gains May Be Curtailed if Core Inflation Remains Moderate] ⑴ In a report, Mitsubishi UFJ analyst Lee Hardman pointed out that if the US core inflation data for June, released on Tuesday, remains at a moderate level, the dollar may face downward pressure, and the market's pricing in the Fed's interest rate hike path may need to be revised. ⑵ Hardman emphasized that the market is currently highly focused on the second-round effect of rising energy prices transmitting to core inflation, which is a key variable determining the Fed's subsequent policy stance. Since the outbreak of the US-Iran conflict, core inflation has only recorded a slight increase. ⑶ If core inflation data again shows a moderate trend, and energy inflation shows marginal easing, market participants will likely lower their expectations for further Fed rate hikes. This revision of expectations will curb the dollar's gains in the coming week. ⑷ Recent safe-haven buying and a revaluation of interest rate hike expectations have jointly pushed up the dollar's exchange rate. However, if inflation data falls short of expectations, it may trigger position adjustments and profit-taking. The focus should be on the degree of deviation between the core CPI month-on-month and year-on-year readings and market expectations.
