Dollar Remains Strong, CPI Data Weaker than Expected

The dollar slumped from its highs this year after the US released weaker-than-expected consumer price index data, though it increased slightly against a basket of other major currencies on Friday in Asia. Sentiment picked up, with investors lowering their expectations for another interest rate hike due to soft inflation report, which showed that price pressures were still weak.

The US dollar index, which gauges the dollar’s strength against a basket of six other major currencies, inched up 0.01 percent, hitting 92.59.

The dollar has reached this year’s high on Wednesday at 93.22 but slipped back on Friday, trading lower than the 93-point level. Meanwhile, its uptrend since April still continues.

According to the US Labor Department, the consumer price index climbed 0.2 percent in April, failing to reach expectations for a 0.3 percent gain. The year-over-year consumer price index rose 2.1 percent, though it also missed analyst expectations.

The consumer price index is a measure of the change in the price of goods and services coming from the perspective of a consumer. It is used to gauge the changes in buying trends as well as inflation. The data released on Thursday showed more evidence that inflation is slowing down, as well as signaled a lower outlook for the Federal Reserve to add another rate hike in the future.

The USD/JPY exchanged hands at 109.47, gaining 0.07 percent. Japan experienced a lighter week of data this week but is scheduled to release its gross domestic product data on Wednesday.

Meanwhile, in China, the People’s Bank of China set the reference rate for the yuan against the dollar, which is the mid-point for the yuan to trade with the dollar, at 6.3524. This was lower than the previous day’s 6.3768. The USD/CNY exchanged hands at 6.3463, sliding 0.04 percent.

Meanwhile, the AUD/USD declined 0.01 percent at 0.7530. The Australian dollar was only slightly moved to the bearish data after Australia’s home loans data came in at -2.2 percent, which was lower than the expected -1.9 percent and the previous -0.2 percent.

The New Zealand dollar also recovered from its five-month low of $0.6903, which was hit on Thursday, following the dovish tone of the country’s central bank. It last traded at $0.6962.

The British pound wasn’t as lucky, plummeting to $1.3460 on Thursday. This was its lowest level in around 4 months, coming after the Bank of England’s decision to reduce its growth and inflation outlook for this year and 2019, though it kept its interest rates unchanged as expected.

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