US Dollar Broadly Lower After Inflation Report

Market Reviews

The US dollar fell against a currency basket after data showing that inflation remained tepid last month dampened expectations for a faster pace of rate hikes from the Federal Reserve this year. The Labor Department reported that the consumer price index rose +0.2% in February after rising a seasonally adjusted +0.5% in January. Ex-food and energy, the core prices rose +0.2%, compared to +0.3% in January. In the year to February, overall prices increased +2.2%, the largest annual growth since November, while core prices were up +1.8% on the year. The market was expecting a +2.3% increase in overall inflation and core prices to rise +1.9%. Additional pressure on the American currency caused the news, that US Secretary of State Rex Tillerson is fired by President Donald Trump.

Philip Lane (ECB Governing Council member) expressed his confidence that inflation will converge to the target over the medium term improves. In addition, he stated that the current level of the euro’s exchange rate is not a concern for the ECB.

EU Chief Brexit negotiator Michel Barnier hopes to seal a deal this month on a transition period after Brexit, and start talks on the future relationship this spring. But still, the policymaker stated, that the UK cannot have at the same time the status of a third country and demand the advantages of the European Union. Jean-Claude Juncker (European Commission President) urged UK to provide further clarity regarding the future relationship.

Australia NAB business condition increased to 21 in February. Australia home loans fell by 1.1% mom in January. Australia NAB business confidence decreased to 9. The OECD (Organisation for Economic Co-operation and Development) forecasts global economy to strengthen in 2018 and 2019. And, global GDP is expected to grow to 4%, up from 3.7% in 2017.