U.S. Dollar Falls On Inflation Fears
11 May 2021 - 5:34PM
RTTF2
The U.S. dollar slipped against its most major rivals in the
European session on Tuesday, as a continued rise in commodity
prices stoked fears about inflation.
Investors worry that a surge in inflation could prompt the Fed
to tighten policy sooner than expected.
The Labor Department will release its latest U.S. CPI data on
Wednesday, which is expected to show a rise of 3.6 percent over the
year in April.
U.S. inflation expectations soared to the highest in a decade as
the economy recovers from the pandemic and on the Fed's
accommodative policy.
The dollar was sold off on speculation that higher inflation
could hurt the value of the currency.
Speeches from Fed members, including John Williams and Lael
Brainard are due later in the day.
The greenback retreated to 108.67 against the yen, from a high
of 108.98 seen at 8:45 pm ET. The greenback may locate support
around the 106.00 level.
Data from the Ministry of Communications and Internal Affairs
showed that Japan household spending grew 6.2 percent on year in
March - coming in at 309,800 yen.
That beat forecasts for an increase of 1.5 percent following the
6.6 percent drop in February.
The greenback edged down to 1.4147 against the pound and 1.2169
against the euro, off its early high of 1.4104 and a 4-day high of
1.2123, respectively. Should the greenback falls further, it is
likely to test support around 1.44 against the pound and 1.23
against the euro.
The greenback reversed from its early 4-day highs of 0.7821
against the aussie and 0.7252 against the kiwi, easing off to
0.7853 and 0.7290, respectively. The greenback is poised to
challenge support around 0.80 against the aussie and 0.74 against
the kiwi.
In contrast, the greenback was up against the franc, at a 4-day
high of 0.9033. Next key resistance for the currency is likely seen
around the 0.92 level.
The greenback was trading in a positive territory against the
loonie, with the pair worth 1.2114. The greenback is seen testing
resistance around the 1.25 mark.
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