US 10-year inflation expectations extend recovery towards 2.50%, focus on US CPI
08.08.2022, 22:47

US 10-year inflation expectations extend recovery towards 2.50%, focus on US CPI

US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, rose for the second consecutive day by the end of Monday’s North American session. That said, the inflation gauge recently flashed the 2.48% mark, reversing the previous week’s losses of late.

The recovery in the long-term inflation expectations should ideally help the US dollar as traders brace for this week’s US Consumer Price Index (CPI) for July, up for publishing on Wednesday.

Also likely to have underpinned the data could be the recently firmer US jobs report for July and the hawkish Fedspeak. On Friday, the headline Nonfarm Payrolls (NFP) rose to 528K versus 250K expected and 398K upwardly revised prior. Further, the Unemployment Rate also inched lower to 3.5% compared to 3.6% expected and previous readings. Following the data, San Francisco Fed President Mary Daly said during the weekend that the Fed is far from done in combating inflation. The policymaker also added, “50 bps increase is definitely in play. We need to keep an open mind.” On the same line was Fed Governor Michelle Bowman who said, “Fed should consider more 75 basis-point interest rate hikes at coming meetings to bring high inflation back down to the central bank's goal.”

It’s worth noting, however, that a lack of major data/events offered a sluggish start to the key week.

Also read: Forex Today: Adjusting positions ahead of US inflation figures

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