Dollar Down Over Higher-Than-Expected Inflation Data
By Administrator_ India
The dollar was down on Friday morning in Asia after the U.S. posted higher-than-expected inflation data in May.
The USD/JPY pair inched up 0.08% to 109.40, with a new analysis saying another COVID-19 surge could come in Japan with or without the Olympics.
The AUD/USD pair inched up 0.04% to 0.7755 as Australia is working on a quarantine-free travel corridor with Singapore. Across the Tasman Sea, the NZD/USD pair inched down 0.01% to 0.7195.
The USD/CNY pair edged down 0.10% to 6.3865.
The GBP/USD pair inched up 0.06% to 1.4182. Investors will be monitoring the opening of the Group of Seven leaders’ summit in the U.K. on Friday.
In the U.S., data released on Thursday said that the consumer price index jumped 5.0% year-on-year in May, above 4.7% in forecasts and 4.2% growth during the previous session. It posted the sharpest rise in over a dozen years. Its core CPI increased 3.8% year-on-year and 0.7% month-on-month in May, both above forecasts prepared by Investing.com.
However, investors are betting that price pressures are not going to force the U.S. Federal Reserve Bank to hike interest rates sooner than expected due to hefty contributions from short-term rises in airline ticket prices and used cars.
Investors now await the Fed’s meeting next week, although investors are aligning with the Fed’s view that inflationary pressures are temporary and that the central bank will keep its current dovish monetary policy unchanged for a while.
It is expected that the central bank will announce a plan for reducing bond buying, but it isn’t forecast to begin until 2022, according to a Reuters poll of economists.
Across the Atlantic, the European Central Bank president Christine Lagarde on Thursday pledged to deliver faster bond buying as the central bank handed down its policy decision.