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Dollar Edges Lower After CPI Data; Fed Seen on Course By Investing.com

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© Reuters. By Peter Nurse Investing.com – The dollar fell in early European trade on Friday as traders bet that a sharp rise in US consumer prices would not be enough to immediately wrench the Federal Reserve out of its ultra-loose monetary stance. At 2:55 AM ET (0755 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, fell 0.1% to 89.990, slightly lower for the week. rose 0.1% to 109.40, rose 0.1% to 1.4179, while the risk sensitivity was slightly higher at 0.7753. Data released Thursday showed the U.S. was up 5.0% year-over-year in May, the steepest increase in more than a dozen years, up 0.6% from the month, while, volatile food and excludes energy prices, up 3.8% yoy. compared to the previous year and 0.7% compared to the previous month in May. The foreign exchange market was on the alert for strong inflation numbers all week and this exceeded expectations. The reaction was muted, however, as the CPI release included heavy contributions from short-term increases in airline ticket prices and used cars, all of which fed into the Fed’s narrative of the rise in inflation as a passing phenomenon. This belief in the Fed’s mindset is evident in the bond market, as the benchmark 10-year US Treasury bond yield fell to a three-month low of 1.44%. When investors worried about inflation in March, the yield had risen to nearly 1.78%. Attention is now drawn to next week’s session, but there are no longer any great expectations for a change in rhetoric about the need to reduce incentives. Elsewhere, it rose 0.2% to 1.2188, with ECB chief Christine Lagarde buying bonds faster and keeping single currency gains in check despite improved central bank growth forecasts. “The main takeaway from the ECB is that accommodation will stay here and, like the Fed, wants it to be data-driven rather than forecast-driven,” said Kathy Lien, analyst at BK Asset Management. Later on Friday, the meeting will meet to decide on the appropriate level for interest rates in the country after an unexpectedly high inflation release earlier this week. Annual consumer inflation accelerated to 6.0% in May, according to data released on Monday (NASDAQ :), well above the central bank’s target of 4% and the highest level since October 2016. Interest rates were then 10% but now at 5%, which led most economists surveyed to expect a 50 basis point increase to 5.5% at 6:30 a.m. ET (1030 GMT). At 2:55 PM ET it was trading 0.7% lower at 71.8027. Disclaimer: Fusion Media advises you that the information contained on this website is not necessarily real or accurate. All CFDs (stocks, indices, futures) and forex prices are not provided by exchanges, but by market makers. Therefore, prices may not be accurate and may differ from the actual market price, which means that prices are indicative and not suitable for trading purposes. Therefore, Fusion Media is not responsible for any trading loss you may incur as a result of the use of this data, and Fusion Media or anyone involved in Fusion Media is not responsible for any loss or damage resulting from reliance on the information, including data, prices, Charts and buy / sell signals included on this website. Please inform yourself comprehensively about the risks and costs associated with trading in the financial markets, as it is one of the riskiest forms of investment.

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