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Volatile Greenback Following Powell, Inflation Data Weighs

LATAM FX
  • Powell’s mention of a restrictive policy ‘for some time’ prompted a kneejerk spike higher for the greenback but the reiteration of data dependency has seen this move reverse course as market participants analyse Friday’s data points.
  • With PCE and Core PCE readings below consensus and the inflation expectations component of the UniMich Survey easing, the USD index remains lower on the day and the greenback bounce evaporated very quickly following Powell's release with potential profit taking dynamics sparking a sharp reversal lower.
  • With little fresh information from Powell, greenback volatility is in full flow and the Bloomberg dollar index has since bounced off the lows in line with slightly higher US yields.
  • Worth noting next week we will have month-end rebalancing ahead of the US ISM Manufacturing PMI and Friday’s August non-farm payrolls report.
  • Regional currency performance remains mixed on Friday:
    • USDMXN Unchanged at 19.9302
    • USDBRL down 0.45% at 5.0872
    • USDCLP up 0.58% at 902.35
    • USDCOP down 0.42% at 4375.23
    • USDPEN up 0.12% at 3.8535
    • USDCNH up 0.25% at 6.8692
    • Gold is down $9.81 (-0.56%) at $1749.08
    • Copper Futures up 6.45 (1.74%) at 376.35

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