U.S. Dollar Off Highs After CPI Data

23:44, 22nd July 2014

(RTTNews) - The U.S. dollar trimmed its early gains against the other major currencies in early New York deals on Tuesday, after the data showed that U.S. consumer price inflation matched economists' expectation in June.

The Labor Department report showed that U.S. consumer price index rose by 0.3 percent in June after climbing by 0.4 percent in May. The increase by the index matched the consensus estimate.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in June after rising by 0.3 percent in the previous month. Economists had expected core prices to edge up by 0.2 percent.

Core prices increased at an annual rate of 1.9 percent in June, reflecting a slowdown from the 2.0 percent growth reported in May.

The U.S. Federal Reserve has set an annual inflation goal of 2 percent.

The greenback was trading at 0.9003 against the franc, after advancing to a 1-1/2-month high of 0.9027 in recent deals. On the downside, 0.89 is seen as the next possible downside target level for the greenback.

Switzerland's trade surplus declined more-than-expected in June as imports rose faster than exports, data from the Swiss Federal Customs Administration showed.

The trade surplus was at CHF 1.38 billion in June, which was less than the CHF 2.78 billion expected by economists.

After climbing to a fresh 8-month high of 1.3459 against the euro in early deals, the greenback eased to 1.3496 shortly thereafter. The next possible downside for the greenback is seen around the 1.36 mark.

The greenback pulled away from an early 5-day high of 101.60 against the yen, falling back to 101.33. If the greenback continues its slide, it is likely to target support around the 101.00 area.

Japan's government on Tuesday downgraded growth outlook for the fiscal year 2014, citing weak exports and subdued demand after the sales tax hike in April.

The Council on Economic and Fiscal Policy, the top advisory panel, said the real gross domestic product will grow 1.2 percent in the fiscal year ending March instead of 1.4 percent estimated in January.

The greenback reversed from an early 4-day high of 1.7048 against the pound, declining to 1.7079. The greenback is likely to test support around the 1.72 zone.

U.K. budget deficit excluding financial interventions increased in June, data from the Office for National Statistics showed.

Public sector net borrowing excluding financial interventions totaled GBP 11.4 billion, which was GBP 3.8 billion than last June. It was forecast to rise to GBP 10.5 billion in June.

The greenback fell to 1.0731 against the loonie and 0.8697 against the kiwi, after rising to 4-day highs of 1.0759 and 0.8654, respectively in early deals. Continuation of downtrend may take the greenback to support levels of around 1.065 against the loonie and 0.875 against the kiwi.

The greenback hit near a 2-week low of 0.9422 against the aussie, coming off from an early Asian session's 4-day high of 0.9361. The greenback may challenge support around the 0.95 mark.

Looking ahead, the U.S. existing home sales data for June is due shortly.