SINGAPORE (Reuters) – After a week of worrying anticipation, markets got the high US inflation they feared, brushed it off and moved on, putting the US dollar under pressure and stuck most major currencies in ranges.
In the early Asian session, the dollar suffered a slight loss as traders believed a one-off 0.6% rise in consumer prices last month was enough to support the Federal Reserve’s assertion that inflation is likely to be temporary.
The dollar bought 109.37 yen and suffered a small weekly loss. It was also on track for moderate weekly losses on the Australian dollar and British pound, most recently trading at $ 0.7748 per Australian dollar and $ 1.4171 per pound.
The dovish commitment of the European Central Bank to stick to a high rate of bond buying held the euro at $ 1.2175.
“We are seeing a market that believes in the Fed,” said Chris Weston, head of research at the Melbourne-based Pepperstone broker, as investors lose concern that a strong recovery in the United States will trigger an early rate hike.
“We’re going to be phased out,” he said. “But it will be done at such a snail’s pace.”
Data released yesterday showed that US consumer prices rose 5% year-on-year, the sharpest rise in more than a decade, while core inflation rose 0.7% in a month.
But the significant contribution in the form of short-term increases in the prices of air tickets and used cars helped convince traders that there will be no rise in interest rates anytime soon.
“This is mostly in line with the Fed’s scenario that we will have a surge, but it will be temporary,” said Westpac currency analyst Imre Speiser.
“This report is consistent with that, he doesn’t mind it. I think the market needed something to oppose it in order to push the US dollar up. “
The US dollar index has declined slightly since the publication of inflation data and was last held at 90.041, more or less unchanged over the week.
The benchmark 10-year US Treasury actually surged to a three-month high in the wake of the CPI as sellers short capitulated and stopped betting on yield gains. [US/]
The focus is now on next week’s Fed meeting, although traders are now saying there may not be a significant shift in rhetoric that downplays the need to cut stimulus.
The plan to cut bond purchases is expected to be announced in August or September, according to a Reuters poll of economists, but it is not expected to start earlier than next year.
In anticipation of fixing the corridor for trade on land, the Chinese yuan exchange rate remained stable at $ 6.3853 per dollar in offshore areas. [CNY/]
The South Korean won traded steadily after the central bank governor hinted at a policy normalization in a preliminary copy of a speech to be delivered later Friday.
Cryptocurrencies seem to have finished the week solidly, with bitcoin seeming to be well supported at around $ 35,000, despite more and more talk of scrutiny from global legislation.
Currency Purchase Prices at 113 GMT
RIC Description Last US Close Percent,% YTD Change, Interest Rate High Rate Low Rate
Euro / dollar
USD 1.2180 USD 1.2176 + 0.03% -0.31% +1.2180 +1.2171
Dollar / Yen
109.4100 109.3150 + 0.00% + 5.83% +109.4450 +0.0000
Euro / yen
133.24 133.08 + 0.12% + 4.98% +133.2800 +133.1100
Dollar / Swiss
0.8943 0.8946 -0.03% + 1.09% +0.8950 +0.8943
Sterling / Dollar
1.4174 1.4176 -0.02% + 3.74% +1.4178 +1.4170
Dollar / Canadian
1.2088 1.2095 -0.04% -5.06% +1.2098 +1.2090
Australian dollar / dollar
0.7754 0.7753 + 0.03% + 0.81% +0.7757 +0.7747
Dollar / dollar 0.7193 0.7196 -0.04% + 0.17% +0.7199 +0.7188
Places of Europe
Tokyo Foreign Exchange Market Information from the Bank of Japan
Reporting by Tom Westbrook. Sri Navaratnam editorial board