Last Update: May 11, 2023, 03:32 AM IST
In afternoon trade, the dollar index was up 0.1% at 101.48 after hitting an earlier low of 101.21. (Image: File photo)
A report from the US Labor Department on Wednesday showed the annual increase in consumer prices fell below 5% in April for the first time in two years.
The dollar held steady against a basket of currencies on Wednesday as data showed inflation slowed slightly more than last month, but traders gave little clarity on the US monetary policy outlook.
A report from the US Labor Department showed on Wednesday that the annual increase in consumer prices fell below 5% in April for the first time in two years.
Closely-watched inflation measures by the Federal Reserve also eased, which could provide incentive for the central bank to hold off on an interest rate hike next month. But with inflation still above the Fed’s 2% target, rates may need to remain high for some time to ease it.
“The market view is that the Fed will cut rates sooner and faster than other central banks. The data are showing some tentative signs of validating those expectations of divergence, but are not clear in suggesting that even faster or deeper cuts are needed,” said Alvis Marino, macro trading strategist at Credit Suisse in New York. “When markets are looking for big things, and the actual results are not shocking, expectations of future volatility are reduced.”
In afternoon trade, the dollar index was up 0.1% at 101.48 after hitting an earlier low of 101.21.
The euro was trading up 0.15% at $1.0979, while sterling was flat against the greenback at $1.2624.
The Japanese yen held on to gains and was last seen at 134.25 as the dollar slipped 0.73%.
Fed funds futures traders are pricing in pause ahead of an expected rate cut in September. The Fed’s target range is 5% to 5.25%.
But Amo Sahota, director at Clarity FX in San Francisco, believes a roughly 80-basis-point cut “looks a bit aggressive” to the market by the end of this year.
“I think what the data says is that the Fed may stay on hold and not raise interest rates. I don’t think this is giving us a real green signal to say that there will be aggressive rate cuts. In June We’ve got another inflation reading ahead of the next Fed meeting. So, that’s going to provide a better focal point going into the meeting,” Sahota said.
The US will report preliminary jobless claims and producer value data on Thursday, which could reinforce recent signs of easing inflationary pressure from softening labor markets and wages.
And Sahota said rising US debt-limiting tensions “present a real threat that markets are not aggressively pricing in.”
Meanwhile, in cryptocurrency, bitcoin gained 0.24% to $27,730 after falling nearly 3% in the earlier session.
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Currency Quote Price at 3:30 PM (1930 GMT)
Details RIC Last US Close PCT Change YTD PCT High Bid Low Bid
last change
Session
Dollar Index 101.4100 101.6200 -0.20% -2.010% +101.8000 +101.2100
EUR/USD $1.0983 $1.0961 +0.21% +2.51% +$1.1007 +$1.0940
USD/JPY 134.3100 135.2400 -0.69% +2.44% +135.4650 +134.1200
EUR/JPY 147.51 148.21 -0.47% +5.14% +148.6700 +147.0500
Dollar/Swiss 0.8891 0.8907 -0.17% -3.84% +0.8927 +0.8868
Sterling/Dollar $1.2628 $1.2622 +0.06% +4.44% +$1.2680 +$1.2603
Dollar/Canadian 1.3373 1.3382 -0.06% -1.30% +1.3414 +1.3335
Aus/Dollar $0.6778 $0.6762 +0.27% -0.54% +$0.6818 +$0.6745
Euro/Swiss 0.9764 0.9760 +0.04% -1.32% +0.9776 +0.9744
Euro/Sterling 0.8696 0.8687 +0.10% -1.67% +0.8700 +0.8673
NZ $0.6366 $0.6335 +0.46% +0.23% +$0.6381 +$0.6324
dollar/dollar
Dollar/Norway 10.5000 10.5610 -0.46% +7.11% +10.5750 +10.4460
Euro/Norway 11.5278 11.5844 -0.49% +9.85% +11.6107 +11.4760
Dollar/Sweden 10.2220 10.2047 +0.42% -1.79% +10.2531 +10.1640
EUR/Sweden 11.2285 11.1812 +0.42% +0.71% +11.2415 +11.1705
(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
