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Dollar Up, Inflation Remains on Investors’ Minds

ForexFeb 10, 2021 10:02PM ET
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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia but continued to hover near two-week lows. Weaker-than-expected U.S. inflation and a promise from the Federal Reserve to keep interest rates low continued to raise investor expectations of meagre returns from the U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 90.415 by 9:53 AM ET (2:53 AM GMT). The index dropped to a two-week low of 90.249 after the release of the U.S. inflation data.

The USD/JPY pair inched up 0.03% to 104.60.

The AUD/USD pair inched up 0.03% to 0.7723, with the AUD just below the two-week high against the dollar touched during the previous session. The NZD/USD pair inched down 0.06% to 0.7209.

The USD/CNY pair was up 0.37% to 6.4582.

The GBP/USD pair inched up 0.05% to 1.3834. The pound was also boosted by diminishing expectations for negative interest rates in the U.K. and climbed towards a nearly three-year high.

In Asia, moves were slight in Japan and China, with both markets closed for holidays.

U.S. inflation data released on Wednesday showed that the core Consumer Price Index (CPI) was flat month-on-month, against the predicted 0.2% growth and the 0.1% growth recorded in December.

Fed Chairman Jerome Powell also noted that unemployment was still high, and re-iterated that the central bank’s new policy framework could accommodate annual inflation above 2% for some time before hiking rates, in his speech on Wednesday.

“In other words, easy policy is going to stay there for a long, long time, and that should be negative for the U.S. dollar,” Westpac currency analyst Imre Speizer told Reuters.

“I think it’ll be something that sits in the background, as just a reminder that the U.S. dollar can’t go up while it’s got that easy policy relative to everybody else,” Speizer added.

Inflation remains a concern, with predictions that pent-up demand and a low-base effect from 2020’s shocks will drive jumps in headline figures by spring. Such a scenario could test the Fed’s resolve.

Investors looked to New Zealand, where COVID-19 is firmly under control, but surging housing prices have pushed inflation above expectations. Investors have pared back further rate cut expectations in response.

“The Reserve Bank of New Zealand (RBNZ) arguably face quite a different communication challenge (to the Fed), with the demand pulse in New Zealand in a much better position than anyone dared hope,” ANZ Bank analysts said in a note.

“RBNZ will welcome this but continue to highlight the need for cautious patience,” the note added.

In Europe, investors await the release of the European Commission economic forecasts, due later in the day.

Dollar Up, Inflation Remains on Investors’ Minds
 

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Comments (6)
The Chad Bull
The Chad Bull Feb 11, 2021 1:56AM ET
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When you can make $100k in a single day buying call options on robinhood you know inflation is coming
awny aleesa
awny aleesa Feb 11, 2021 1:22AM ET
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But all data releases from the US point to a lower than expected inflation , and this last CPI release is an example ... do every body is concerned about high inflation which didn’t materealised yet !!
TL Chan
TL Chan Feb 10, 2021 11:44PM ET
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Fed steal my money on my pocket and not going into jail! What kind of world we are in !
TL Chan
TL Chan Feb 10, 2021 11:42PM ET
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inflation is in asset price, food price, in everywhere, stop helping people telling lies!
King Tolba
King Tolba Feb 10, 2021 11:07PM ET
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I want you to know that dollar will collapse billion per cent. Olny today Asian stocks was closed.
Rodolfo Barraco
Rodolfo Barraco Feb 10, 2021 10:41PM ET
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Stock market at record highs during pandemic and you state no inflation??? There is the inflation! Cryptos, stocks, real state, comodities all is 100% higher! Thats the definition of inflation!! Money worth nothing. You need more green papers to buy the same ammont of anything. INFLATION! STOP THE FAKE NEWS, HIDING THAT WE ARE BEING FLOODED WITH INFLATION. Stop saying asset bubble to avoid calling it by its name. Outrageous inflation. This is creating the worse concentration of wealth in human history and you are hiding it. Shame on you
Dwain Hobbs
Dwain Hobbs Feb 10, 2021 10:41PM ET
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Well said ..
King Tolba
King Tolba Feb 10, 2021 10:41PM ET
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Yes of course i am agree with you inflation will rising soon but always a lot of people don't want seeing the sun. Dollar will collapse and gold will and silver will rising.its nice to chatting with you genius 🎩
 
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