Yahoo Finance Dollar Creeps Higher on Firmer U.S. Inflation Data
By Yasin Ebrahim
Investing.com – The U.S. dollar edged higher Thursday, supported by firmer U.S. inflation data, but a rise in the pound and yen kept gains in check.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.06% to 98.98.
The Labor Department said on Thursday its consumer price index rose 0.2%, in line with expectations last month, while the year-on-year CPI rose to 2.5%, topping forecasts for a 2.3% rise.
Federal Reserve Chairman Jerome Powell has signaled that a faster pace of inflation would push the central bank off the sidelines. But this latest inflation report is unlikely to shift the Fed's thinking on monetary policy as its preferred inflation gauge, the core personal consumption expenditures price index, remains below the 2% target.
"Today's data should not impact the Fed's on-hold policy stance," said High Frequency Economics.
A surge in the pound, meanwhile, kept the dollar in check on rising hopes Prime Minister Boris Johnson is eyeing fiscal stimulus after showing U.K. finance minister Sajid Javid the door.
Javid reportedly resigned after Johnson asked him to fire his closest advisers in order to keep his position, the Financial Times reported.
GBP/USD rose 0.70% to $1.3051.
EUR/USD fell 0.28% to $1.0841, and analysts are calling for a further decline as the sluggish pace of growth in the EU continues.
"The euro area remains a region of low growth, accompanied by weak inflation dynamics and our baseline is for a continued relative underperformance of European financial assets," Danske said.
USD/JPY fell 0.23% to Y109.83 as a rebound in safe-haven demand underpinned the yen following a surge in coronavirus deaths and infections in China overnight
USD/CAD climbed 0.05% to C$1.3255 as the loonie remained supported by hopes that OPEC and Russia will act to steady oil prices amid worries about a Covid-19 hit to Chinese oil demand.
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