Dollar tumbles in New York on soft US inflation
|The greenback tumbled across the board in New York on Wednesday as the release of soft U.S. inflation data triggered speculation that the Federal Reserve would not be as aggressive in its rate hikes as previously anticipated.
Reuters reported U.S. consumer prices did not rise in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years.
The Consumer Price Index (CPI) was unchanged last month after advancing 1.3% in June, the Labor Department said on Wednesday in a closely watched report that nevertheless showed underlying inflation pressures remain elevated as the Federal Reserve mulls whether to embrace another super-sized interest rate hike in September. And the Economists polled had forecast a 0.2% rise in monthly CPI in July on the heels of a roughly 20% drop in the cost of gasoline. Prices at the pump spiked in the first half of this year due to the war in Ukraine, hitting a record-high average of more than 5 per gallon in mid-June, according to motorist advocacy group AAA.
Versus the Japanese yen, dollar met renewed selling at 135.30 in Asian morning and retreated to 134.84 in European morning. The pair then tumbled at New York open after the release of soft U.S. CPI data and hit a 1-week low of 132.04 in New York morning before staging a short-covering rebound.
The single currency traded sideways in Asia before briefly edging down to session lows at 1.0203 in European morning. The pair then rallied to a 5-week peak at 1.0368 in New York on usd's broad-based selloff before retreating sharply to 1.0295 due partly to cross-selling of euro especially vs sterling.
The British pound traded with a firm undertone in Asia and gained to 1.2105 in European morning before rallying to a 1-week high at 1.2277 in New York morning on usd's weakness due to soft U.S. CPI. Cable then pared its gains and retreated to 1.2211 on profit-taking.
Data to be released on Thursday:
U.K. RICS housing price balance, Japan market holiday, Australia consumer inflation experience, U.S. initial jobless claims, continuing jobless claims and PPI.
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