Dollar extends losses following CPI, Euro rebound

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Dollar extends losses following CPI, Euro rebound gathers pace

American dollar and EUR/USD trending points

  • American dollar extended losses on Tuesday (March 12th), as a stronger British currency in a nerve-wracking volatile day ahead of another Brexit vote weighed on
  • US dollar had also tumbled against safe haven Japanese Yen, as investors usually seek safety on Japanese Yen whenever they feel insecure.
  • American dollar had also winded a euro rebound closer to a daily high of $1.13 region after tearing apart towards $1.1175 level last week, following release of a US consumer price data that indicated a low inflation, which is more likely to support Fed’s patient stance over interest rate hiking policy.

US dollar downswing unfolds, as US consumer price index points to a lower inflation

On Tuesday, the 12thof March, a downbeat momentum of American dollar appeared to be gathering pace, as US consumer price index data points further to a lower inflation despite a squeezing labor market. Apart from that, the American dollar had also lost ground against the safe haven Japanese Yen, as GBP/USD, alongside Brexit volatility had been reducing the risk appetite and investors were seeking safety into safer assets such as Japanese Yen and Swiss Franc.According to today’s data, the US CPI (Consumer Price Index) rose for the first time in roughly four months on February, however the increase posted the smallest annual gain in two and a half years. Followed by the reveal of CPI data, US dollar had again posted a plunge against a basket of six major rivals, down by 0.17 percent to 96.99.

US Dollar index daily price chart

US Dollar index daily price chart

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While this report was being prepared, March 12th, GMT. 16.00, the EURO was 0.45 percent higher against American dollar to 1.1295, however the USD/JPY posted a slight gain of 0.12 percent to 1.1135, after falling as much as 0.20 percent below 1.1110 level over the early Asia-Pacific trading hours.

EUR/USD daily price chartEUR/USD daily price chart

Today (March 12th), the US Labor Department had said that its consumer price index rose to 0.2 percent, mostly lifted by the gains of the costs of gasoline, foods and rents. February delivers a gain in the CPI after three straight months of pause and excluding the volatile food and energy components, the CPI was up by 0.1 percent, its smallest rise over a decade (August 2018).

Bottom Line

At this standpoint, traders are eyeing US durable goods order data due to be released tomorrow at GMT. 12.30, which would pivot the US dollar index, while a Brexit vote due to be held on evening would more likely to act as a catalyst for the US dollar index as well against a basket of six major currencies.

As of now, slowing domestic and global growth had been keeping inflation in check, thereby supporting the patient stance of Federal Reserve on further rate hike, despite a contracting labor market and growing wage. It was surprising for US economy to keep inflation closer to its target of 3 percent (2.8 percent) despite an annual growth jump of 3.4 percent on February. Never the less, tomorrow’s US durable goods order due to be released GMT. 12.30 as beforementioned would likely to dictate terms of US dollar for the rest of the week.

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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

 

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