The dollar fell in early European trading Wednesday, pulled down to 3-week lows by dropping bond yields following an increase in US inflation in March was regarded as insufficient to persuade the Federal Reserve to change its stance.
At 2:55 a.m. ET (0755 GMT), the Dollar Index, which measures the value of the US dollar against a basket of 6 other currencies, went down 0.2 percent at 91.683, its lowest level since March 22.
The USDJPY dropped 0.2 percent to 108.83, its lowest level in 3 weeks; the EURUSD rose 0.2 percent to 1.1967, its highest level since the middle of March; the GBPUSD clubed 0.3 percent to 1.3791, and the risk-delicate AUDUSD climbed 0.5 percent to 0.7676.
The consumer price index in the United States increased by 0.6 percent in March compared to the last month, the biggest increase since August 2012, and by 2.6 percent year on year, both of which were 0.1 percentage points higher than marketplace predictions.
While such numbers were higher than anticipated, some in the marketplace anticipated a steeper rise in inflation seeing the magnitude of pent-up demand as a result of fiscal stimulus and a strong vaccination rollout.
The yield on the benchmark ten-year US Treasury note fell to 1.620 percent, down from 1.78 percent at the end of March.
Officials at the Federal Reserve have consistently indicated that the central bank would see any near-term price pressures as transitory, and this Consumer Price Index is not expected to put pressure on them to begin tapering the monetary policies that have assisted the US economic recovery from the corona spread.
An analyst at ABN Amro said they don’t think there will be a rise in production and foreign trade expenses – obvious in the upside shockers in Producer Price Index inflation in the previous week – to have a substantial effect on the Consumer Price Index, given that such expenses represent a pretty small input to consumer prices.
As a result, the outlook for inflation remains largely unharmful, and they expect the Fed to thoroughly assess this inflationary bounce.
In other news, the New Zealand dollar – US dollar pair rose 0.7 percent to 0.7101, gaining from a softer greenback, despite the fact that New Zealand’s central bank kept its official interest rate and asset purchasing program unchanged.
USDRUB dropped 0.4 percent to 75.63 after US President Joe Biden suggested a meeting with Russian President Vladimir Putin to address a slew of issues, trying to defuse tensions sparked by Russia’s military buildup on Ukraine’s border.