On Tuesday, the American currency faltered against most major and emerging market currencies after US economic data had unleashed a strong inflation-surge in March, nonetheless, the latest rise in inflation would unlikely to sway US Federal Reserve away from its commitment to keep interest rate at a near-zero level for an unforeseeable future, which in effect had added further strains to US Treasury bond notes alongside the greenback.
In point of fact, in the day’s steep downfall in US Dollar Index (DXY) was entirely galvanized by a slew of economic data showing a robust uptick in inflation indicators in March, while a sharp pick-up in PCE (Personal Consumption Expenditure) Index to 1.5 per cent, which US Fed usually tracks down as its key inflation indicator, coupled with a dovish monetary policy from the US Central Bank had added to a bullish wing to riskier assets and currencies.
Nonetheless, US inflation still hovers well-below the US Fed’s target of 2 per cent. Apart from that, in the latest flashpoint of an inflation-surge in US economy, US Consumer Prices Index soared 0.6 per cent last month, the index’s highest level since the August of 2012, while excluding gasoline and foods, US Consumer Prices Index rose 0.3 per cent in March.
Still, a majority of Wall St. analysts alongside the US Fed Chair Jerome Powell were expecting a recent uptick in inflation indicators would be short-lived, which in effect had helped ease the US Dollar’s safe-haven bid.
However, gold futures, often contemplated as a hedge against inflation, rose sharply on Tuesday.
American currency fell to three-week low after key inflation data
Citing statistics, in the day’s FX market closure, the US Dollar Index (DXY) measured against a basket of six major currencies on an average fell 0.3 per cent to 91.83, its lowest level since March 23, while the bloc’s common currency shared among 19 euro-zone member states, euro, gained 0.28 per cent to $1.1945.
American Dollar, in tandem, was plunged as much as 0.30 per cent against the safe-haven Japanese Yen to 109.10 Yen per Dollar, while the Aussie and Kiwi added 0.29 per cent and 0.34 per cent respectively to $0.7643 and $7051 against their American counterparts.
Meanwhile, addressing to US Fed’s view that the latest increase in inflation would unlikely to sustain, a senior market analyst at Western Union Business Solutions in Washington, Joe Manimbo said, “It keeps unchanged the outlook of the Fed to stay the low rate course over the foreseeable future.
We’re likely to see inflation move higher, before it eventually moves lower. So far the economy is sticking to the Fed’s script. ”