Dollar falls after cooler-than-expected consumer price data

Written by Chuck Micolajkkak

New York (Reuters) – The dollar fell on Tuesday, when some of its sharp gains were returned one day before the inflation reading came without market expectations.

The Ministry of Labor said that the consumer price index increased by 0.2 % last month, less than Reuters ‘economists’ expectations for a 0.3 % profit, after dipping 0.1 % in March.

However, steam inflation is likely to pick up in the coming months as American definitions raise the cost of imported goods.

“Although the address number of inflation was better than expected, there are indications that the customs tariff has already led to high prices,” said Brian Jacobsen, chief economist at Annex Wealing Management at Menomone Falls, and Wisconsin.

“Rejection of the temperature of the definitions is good because the price effects will start leaking to the consumer basket very quickly,” he said. “Trade reset with China may mean that the Federal Reserve can return to work as usual and gradually resume cut prices later this year.”

The dollar index, which measures vegetables against the currency basket, decreased by 0.67 % to 101.05, with the euro increased by 0.81 % at $ 1.1177.

Greenback increased more than 1 % on Monday on optimism that the tariff deal between the United States and China could cool the trade war between the world’s largest economists, raising the risk of global recession.

The dollar is still nearly 3 % less than April 2, when president Donald Trump announced the definitions, prompting investors abroad to reduce their exposure to American stocks and bonds.

Against the Japanese yen, the dollar weakened by 0.57 % to 147.6, after mobilizing more than 2 % a day before the mood over risk has led to the appetite of safe assets.

Greenback fell 0.54 % to 0.841 against the Swiss franc after climbing 1.6 % on Monday.

The dollar fell 0.02 % to 7.197 against the Chinese naval yuan, after decreasing to the lowest level in six months of 7.1779.

Reducing commercial tensions between the United States of China has communicated the market participants to the return of stagnation, as well as the timing and size of interest rates from the Federal Reserve this year.

The major brokerage firms, including Goldman Sachs, JP Morgan and Barclays, have expanded the scope of recession in the United States and we saw to reduce the federal reserve policy.

It is now viewed to reduce the average rate of at least 25 basis points at the Central Bank meeting in September, compared to the prior view to reduce the July meeting, according to LSEG data. About 51 basis points of discounts are now priced for 2025.

The British pound has strengthened 0.95 % to $ 1.3297 and was at the pace of the largest gains for one day since April 28.

Among the encrypted currencies, Bitcoin gained 1.59 % to 104,314.79 dollars after its height to 105,716.07 dollars on Monday, which is 3-1/two months. ETHEREUM jumped by 5.09 % to $ 2,612.46 and was on the right track to achieve his sixth gain in seven sessions.

(Mikolajczak reports: Additional reports by Rae Wee and Linda Pasquini; Liberation by Mark Heinrich and Lezli Adler)