US Dollar Dips on Softer Inflation Print
The United States (US) loses weight against peers in the foreign exchange market amidst a surprise decline in the consumer price index, according to recent data.
The dollar index fell to 101.6 on Wednesday, a level not seen since early February, after US inflation for March was softer than many investors were expecting.
The headline inflation eased to 5% compared to forecasts of 5.2% and the monthly rate increased by 0.1%, half the market expectations. At the same time, core inflation edged higher to 5.6%, but was in line with forecasts.
Traders continued to bet on a 25bps rate hike for next month after the CPI report. All eyes are on the FOMC minutes for further clues on the Fed’s next move.
The Consumer Price Index (CPI) climbed 0.1% last month, below economists’ expectations for a 0.2% gain, and down from a 0.4% increase in February.
In the 12 months through March, the CPI increased by 5.0%, the smallest year-on-year gain since May 2021. The CPI rose 6.0% on a year-on-year basis in February.
Excluding the volatile food and energy components, the CPI increased 0.4% last month after rising 0.5% in February. Sticky rents continued to drive core CPI.
The dollar index was last at 101.68, down 0.41% on the day and below the level of around 102.11 before the data.
The euro reached $1.09900, the highest since Feb. 2, and was last at $1.0967, up 0.48% on the day. The dollar dipped to 133.04 Japanese yen, from around 133.85 before the data.
The euro extended gains towards the $1.1 level, touching its highest level since February 1st, as investors turned to risker currencies after data showed the US inflation rate slowed more than expected in March.
At the same time, expectations the European Central Bank will keep raising interest rates in the coming months to combat inflation will likely provide support. # US Dollar Dips on Softer Inflation Print
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