The U.S. dollar was lower against its major counterparts during European deals on Tuesday, despite the release of a data showing better than expected U.S. consumer prices in the month of March.
Data from the Labor Department showed that U.S. consumer price index beat forecasts in March.
The consumer price index climbed 0.6 percent in March after rising by 0.4 percent in February. Economists had forecast an increase of 0.5 percent.
Excluding food and energy prices, core consumer prices rose 0.3 percent in March following an increase of 0.1 percent in the previous month. Economists had expected core prices to rise by 0.2 percent.
Boston Federal Reserve Bank President Eric Rosengren said on Monday that the economy is likely to grow rapidly this year, although the labour market recovery could take longer.
Policy makers "can be more patient and wait for more tangible signs that inflation has increased, rather than just forecasts, before starting to raise rates," he added.
The dollar rose in the Asian session, as U.S. bond yields climbed following better demand at auctions of three- and 10-year notes on Monday.
The greenback dropped to 1.1939 against the euro, which was its lowest level since March 23, from a high of 1.1877 seen at 8:30 am ET. The pair was worth 1.1910 when it closed deals on Monday. The greenback may locate support around the 1.21 level.
Data from Destatis showed that German wholesale price rose for a second straight month and at the fastest pace in four years in March, largely led by higher prices for petroleum products.
The wholesale price index rose 4.4 percent year-on-year, which was the fastest pace since March 2017, when they increased 4.8 percent.
The greenback remained lower against the yen, at a 5-day low of 109.13. The pair had closed Monday's deals at 109.37. If the greenback extends decline, 105 is possibly seen as its next support level.
The greenback declined to the weakest level since March 4 against the franc, at 0.9209. At yesterday's trading close, the pair was quoted at 0.9222. On the downside, 0.88 is possibly seen as its next support level.
The greenback pulled back to 1.2560 against the loonie, 0.7044 against the kiwi and 0.7628 against the aussie, after rising to a 6-day high of 1.2630, 5-day high of 0.7004 and near a 2-week high of 0.7585, respectively in prior deals. The next possible support for the greenback is seen around 1.23 against the loonie, 0.72 against the kiwi and 0.78 against the aussie.
The greenback was trading at 1.3754 against the pound, slightly easing off from a high of 1.3694 hit at 9:00 am ET. The pound-greenback pair had ended yesterday's trading session at 1.3736. The greenback is seen finding support around the 1.41 region.
Data from the Office for National Statistics showed that the UK economy expanded in February but at a slower than expected pace.
Gross domestic product grew 0.4 percent, following a revised 2.2 percent fall in January. But this was slower than the expected growth of 0.6 percent.
The material has been provided by InstaForex Company - www.instaforex.com
US dollar at the lows of the day
Strong demand at a US 30-year bond auction has kept the pressure on the US dollar today. Worries about a break higher in Treasury yields are fading with 10-year benchmark rates down 4.2 bps to 1.62% today.
Results of the US 30-year sale
Strong demand at the 30-year auction will put downward pressure on the dollar and USD/JPY in particular. It highlights real-money demand for bonds and the growing potential of some kind of interim top in yields.
MUFG on the outlook for the euro
For bank trade ideas, .
". France has seen a pick-up with over
0.5mn vaccines administered on Friday, a one-day record. In Germany on
Thursday, 719k vaccines were administered while in Italy the 7-day
average of administered vaccines hit 200k for the first time over the
weekend," MUFG notes.
AUD - Australian Dollar
Price action across currency markets was largely muted through trade on Monday restricting the Australian Dollar to the lower bounds of recent ranges. The AUD bounced between intraday lows at 0.7595 and session highs at 0.7635 as investors appeared reluctant to extend positions amid vaccine uncertainty. Reports China’s Sinovac vaccine has just a 50% efficacy has prompted concerns across those countries reliant on the vaccine as part of their immunisation schedule. This coupled with the clotting concerns linked to AstraZeneca’s vaccine and the timeline to full recovery looks to be extending into 2022. COVID 19 deaths rose in the US for the first time in over a month while India struggles to control an outbreak that has swept the country. Despite sustained strength across equity markets and maintenance of an underlying positive bias through the long term, the extension in expectations and ongoing COVID-19 impacts have amplified short term risks and continue to weigh on AUD upside.
With little of note on today’s ticket we expect direction will remain largely range bound ahead of Domestic labour market data and US CPI and retail sales data on Wednesday and Thursday. Having broken below 0.76 US cents we are watching key support levels for any sign of a consolidated break below this handle.
Moves across majors were subdued through trade on Monday with commodity currencies flat and the Pound and Yen enjoying only modest upside. With little of note on the day’s macroeconomic ticket the dollar index edged marginally lower as the GBP crept back above 1.3750, the Euro touched highs at 1.1920 and the Yen forced a shift back toward 109.20. Investors appear reluctant to extend positions in the face of short-term uncertainty, creating an absence of conviction across currency markets. While analysts have largely priced in rate variances and long run optimism, short term headwinds created by delays to the global vaccine rollout and ongoing COVID-19 outbreaks have extended the timeline of expectation for a global economic recovery.
With little of note on today’s data ticket we turn to Wednesday’s CPI print and Thursday’s US retail sales report for direction and guidance through the week ahead.
AUD/USD: 0.7580 - 0.7670 ▼
AUD/EUR: 0.6380 - 0.6450 ▲
GBP/AUD: 1.7880 - 1.8120 ▲
AUD/NZD: 1.0780 - 1.0890 ▲
AUD/CAD: 0.9510 - 0.9620 ▲