The dollar edged higher to start the week, pulling away from a two-month low as rising oil prices and a wary eye on this week’s inflation data gave the currency some early support.
Crude prices pushed higher to start the week as the outlook around Middle East tensions remained unsettled, and that uptick in oil rippled into currency markets, giving the dollar some modest lift after last week’s sharp selloff. The move comes just days after the greenback tumbled to a seven-week low following Friday’s surprisingly weak July jobs report, which showed payrolls falling instead of the solid gain economists had expected.
With that jobs shock still fresh, traders are now turning their attention to this week’s inflation data as the next major test for the dollar’s direction. Consumer price figures due mid-week are widely seen as the key release, since they’ll shape expectations for how the Federal Reserve balances a softening labor market against still-present inflation pressure. A hotter-than-expected reading could complicate the case for near-term rate cuts, while a cooler one would likely reinforce the dovish shift markets have been pricing in since Friday’s jobs data.
For now, the dollar’s bounce looks more like a pause after a sharp move than a clear reversal, with the currency still trading well below where it started last week. Whether oil-driven support can hold through the inflation release, or gets overwhelmed by it, should become clearer as the week progresses.
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