The United States of America dollar, on Friday, August 11, traded down across the board following the release of July inflation figures which narrowly missed consensus estimates but showed an increase from the previous month.
The ICE Dollar Index DXY, -0.50% which measures the greenback against a basket of six rival currencies, dipped into negative territory following the data release, trading at 93.2170, down from 93.460 earlier on Friday.
The consumer price index climbed 1.7% on the year versus expectations of 1.8% and the June figure of 1.6%. Core inflation excluding food and energy came in at 1.7%, in line with estimates and June numbers.
Low inflation numbers have kept investors as well as the Federal Reserve on their toes, as disappointing numbers weighed on the possibility that the Fed could raise interest rates again or more aggressively.
“A softer reading would mean fresh trouble as it would remind investors that inflation remains well below Fed’s target and suggest that a December rate hike might not be that likely after all,” he said.
“The dollar had picked up over the past days amidst the scramble for safety,” Neil Mellor, chief currency strategist at BNY Mellon said, adding that the winning streak was brought to an end by the disappointing CPI numbers earlier that gave way to a stronger euro.
The euro EURUSD, +0.5521% spiked on the back of the release, buying $1.1808, up from $1.1774 late Thursday in New York, while the pound GBPUSD, +0.2389% briefly jumped to $1.2988, compared with $1.2978 on Thursday. Both currency pairs retreated from their initial highs earlier on Friday.
The euro EURGBP, +0.2976% also continued to strengthen against the Brexit-ridden pound, with one euro buying £0.9098 compared with £0.907 late on Thursday.
“Sterling is under an enormous amount of pressure,” Mellor said. “We’ve seen very few EUR/GBP closes at this level.”
The pair was last in £0.9 territory in November 2016. The OECD outlook said the U.K. was en route for slowing growth earlier this week as uncertainties about the post-Brexit economy remain.
That helped to push up currencies perceived as safer assets, like the Japanese yen and Swiss franc. The dollar USDJPY, -0.21% fetched ¥109.04, slightly up ¥109.20 on Thursday, while the Swiss franc CHFUSD, +0.1873% bought $1.0396, up from $1.0389.
Other Asian currencies, however, stumbled on fears of a conflict in the region. Against the South Korean won USDKRW, -0.22% the dollar dipped to 1,142.03 won on the inflation numbers, after initially rising to 1,146.41 won earlier on Friday versus 1,144.16 won on Thursday.
