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Forex - U.S. Dollar Drops as Data Supports Fed Rate Hike Pause

ForexMar 13, 2019 11:31AM ET
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Investing.com - The U.S. dollar drifted lower on Wednesday as economic data stateside reinforced the Federal Reserve’s current neutral stance on interest rates, while currency pairs moved on economic and political news abroad.

At 11:30 PM ET (15:30 GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dropped 0.21% to 96.70.

Producer prices in the U.S. rose only marginally in February, showing a similar increase to the consumer price index and adding to signs that inflationary pressure was muted.

Durable goods orders did show the strongest growth in six months in January, but were insufficient to change the outlook that the American economy has been losing momentum in the first part of the year.

Subdued inflation and slowing growth provides little impetus for Fed Chief Jerome Powell to change his promise that the central bank would maintain a “patient, wait-and-see approach”.

The U.S. dollar was generally weaker across the board on Wednesday with most of the focus on cable.

The pound received a boost as the U.K. parliament once again rejected British Prime Minister Theresa May’s deal with the European Union.

The British parliament will hold another vote at around 3:00 PM ET (19:00 GMT) in which it is expected to shut down any possibility of the U.K. leaving without a deal, which would likely lead to a proposal for the March 29 deadline to be delayed.

The euro also traded higher against the greenback after economic data showed stronger-than-expected industrial production for the eurozone in February.

To the contrary, the Australian dollar was under pressure as a reading of consumer confidence hit its lowest level in more than a year in March. The New Zealand dollar, tightly linked to the Aussie, also headed lower against the American currency.

The Japanese yen showed little movement with USD/JPY trading unchanged at 111.34.

Forex - U.S. Dollar Drops as Data Supports Fed Rate Hike Pause
 

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