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Dollar bounces as Eurozone inflation beats expectations

Risk assets fell on Tuesday as worries of higher inflation increasing stagflation risks seeped back into markets. This saw the broad dollar index, DXY, close marginally in the green. The latest eurozone inflation data proved highly uncomfortable for the ECB with the flash estimate surprising on the upside on the both the headline and core prints. We get the Bank of Canada meeting later today with a 50bp rate hike fully priced in.  Treasury yields, that is interest rates on US Government bonds, jumped sharply higher after the Fed Governor Waller said he wanted to go down the route of several 50bp rate hikes in order to be certain that inflation is brought under control. It seems there is a split developing on the Fed with the likes of Atlanta Fed President Bostic more open to a possible pause in September. DXY stabilises ahead of jobs data The dollar index fell 1.2 in May giving back some of its hefty gains on the year. We get two job reports today which act as the forerunners to the monthly nonfarm payrolls numbers released on Friday. US ADP private sector employment for May and the US JOLTS data for April are expected to highlight how tight the US labour market still is. The latter is forecast to show that job vacancies fell to 11.3mn in April, down slightly form Marchs 11.5mn. After making 20year highs in midMay just above 105, the greenback has pulled back below resistance at the January 2017 high at 103.82 and the pandemic 2020 top at 102.99. This should now act as a…

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