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Dollar Up Despite Softer-Than-Expected Inflation Data

Published 06/27/2021, 10:41 PM
Updated 06/27/2021, 10:50 PM
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By Doris Yu

Investing.com – The dollar was up on Monday morning in Asia although the U.S. inflation data was slightly softer than expected. Investors remained concerned about a tightening monetary policy from the U.S. Federal Reserve should inflationary pressures continue to intensify.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.03% to 91.868 by 10:33 PM ET (2:33 AM GMT).

The USD/JPY pair inched down 0.08% to 110.69. The Bank of Japan released its summary of opinions earlier in the day, where policymakers expected that the accelerating COVID-19 vaccination will prompt economic recovery.

"A positive economic cycle is kicking off in Japan due to progress made in vaccinations," one of the nine board members said.

The AUD/USD pair inched down 0.01% to 0.7585 and the NZD/USD pair inched down 0.03% to 0.7070.

The USD/CNY pair edged up 0.13% to 6.4631.China will release the manufacturing and non-manufacturing purchasing managers' indexes on Wednesday.

The GBP/USD pair inched up 0.04% to 1.3882, with Andrew G Haldane, a member of the Bank of England Monetary Policy Committee, due to speak later in the day.

The core personal consumption expenditure (PCE) price index grew 0.5% month-on-month in May, lower than 0.6% in forecasts prepared by Investing.com and the 0.7% figure in April. The core PEC price index surged 3.4% in the 12 months through May, the largest gain since April 1992.

Although inflation is expected to slow at the end of 2021, investors remain cautious about price pressures driven by wages due to a tight labor market.

Investors now await June's U.S. employment report, including nonfarm payrolls, due on Friday.

“Depending on the outcome of the payroll's data, the market could start pricing in more chances of a rate hike next year," Yukio Ishizuki, senior currency strategist at Daiwa Securities, told Bloomberg.

Meanwhile, investors remained optimistic about the ongoing economic recovery from COVID-19 after U.S. President Joe Biden said he didn’t plan to veto a $1.2 trillion bipartisan infrastructure bill if a separate Democratic spending plan doesn’t pass Congress.

“That statement understandably upset some Republicans, who do not see the two plans as linked… my comments also created the impression that I was issuing a veto threat on the very plan I had just agreed to, which was certainly not my intent,” Biden said in a statement.

In cryptocurrencies, Bitcoin traded at $32,820. It has declined 3.1% during the previous week. Ether fetched $1,831 and registered its third straight week of loss.

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