Apr 17 2024: In the early European trading session on Wednesday, the U.S. dollar showed a slight decline from its recent highs, while the British pound strengthened after the release of U.K. inflation data indicating a slower rate in March than initially expected.
During the 04:35 ET (09:35 GMT) session, the Dollar Index, which tracks the dollar against a basket of major currencies, dipped 0.1% to 105.960, slightly below Tuesday’s five-month peak of 106.51.
The recent strength of the dollar was driven by comments from Fed Chair Jerome Powell, suggesting an extended period of higher interest rates due to slower progress in reducing inflation than previously anticipated.
Despite some profit-taking and a retreat in bond yields on Wednesday, analysts remain cautious about the dollar’s potential for further gains, especially in the event of a sell-off in equities.
Meanwhile, the pound gained ground against the dollar, rising 0.4% to 1.2470, after U.K. inflation figures showed a modest slowdown in March. This data suggests that expectations for a Bank of England rate cut may be delayed.
In the eurozone, EUR/USD climbed 0.3% to 1.0646, rebounding from recent lows. European Central Bank officials have been advocating for a rate cut in June as inflation is expected to ease.
The yen remained weak, with USD/JPY edging down to 154.55, close to its 34-year high. Japanese export data surpassed expectations, supported by the yen’s depreciation. However, concerns about potential intervention to strengthen the yen persist.
USD/CNY saw limited movement, trading at 7.2370, as markets digested mixed economic data from Tuesday, and the People’s Bank of China kept its midpoint fix unchanged.