MUFG: Expect limited dollar gains ahead of CPI data

The dollar rebounded from Friday’s losses after a weaker-than-expected increase in U.S. nonfarm payrolls, but as investors focused on U.S. data due to be released on Thursday, MUFG currency analyst Lee Hardman said in a note. The key inflation data for July is expected to limit gains.

“Last month’s price action underscores how vulnerable the dollar could be to another sell-off should the U.S. CPI report weaken on Thursday,” he said.

If the data again shows a sharp slowdown in core inflation, it will reinforce expectations that the Fed may stop raising interest rates.