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Friday March 29, 2024

Dollar weakens

By REUTERS
May 12, 2018

TOKYO: The dollar hovered below a 4-1/2-month high against a basket of major currencies on Friday after tepid U.S. inflation data prompted traders to pare bets of faster rate hikes.

U.S. consumer prices rose less than expected in April, which would support gradual, rather than more aggressive, rate increases by the Federal Reserve.

"Given recent rises in oil prices, a weaker dollar earlier this year, and U.S. tax cuts, markets were clearly worried more about upside risks in inflation," said Minori Uchida, chief currency strategist at MUFG Bank.

The so-called core CPI, which strips out the volatile food and energy components, rose 0.1 percent from previous month, compared to economists´ median forecast of 0.2 percent rise. It lodged a year-on-year rise of 2.1 percent, matching March´s increase. The dollar´s index against a basket of six major currencies stepped back to 92.71 from Wednesday´s 4-1/2-month high of 93.42.On the week, it was up 0.1 percent, the fourth straight week of gains if sustained by the end of the day.

While dollar bulls expect U.S. yield advantages to underpin the dollar in the near term, others say its rally appeared to be running out of steam.