Dollar falls in early trade, Euro rises 0.05%

13 Apr 2023 , 08:21 AM

The dollar suffered on Thursday as risk sentiment increased as a result of lower-than-expected U.S. inflation statistics and predictions that the Federal Reserve will end its monetary tightening after raising interest rates one final time next month.

The dollar index, which compares the value of the dollar to six important rival currencies, declined 0.03% to 101.44, remaining close to a one-week low of 101.40 after falling 0.6% overnight.

After increasing by 0.4% in February, the Consumer Price Index increased by 0.1% last month as higher rental prices more than offset a drop in petrol prices. 

The failure of two regional banks spurred some Federal Reserve policymakers to consider suspending interest rate rises, but they ultimately decided that high inflation needed to be addressed, according to minutes from the Fed’s most recent meeting in March.

The staff’s predictions of a slight recession later this year were also included in the minutes.

According to CME FedWatch Tool, the Fed increased interest rates by 25 basis points in March, and the markets are currently pricing in a 70% possibility that rates will rise by another 25 bps in May.

In spite of the fact that the U.S. economy is strong, the labour market is tight, and inflation is too high, San Francisco Federal Reserve Bank President Mary Daly said on Wednesday that the Fed still has ‘more work to do’ on raising interest rates because of other reasons like tighter credit conditions.

The euro increased by 0.05% to $1.0994 after reaching a session high of $1.1005 earlier in the day.

While sterling was last trading at $1.2486, up 0.04% on the day, the Japanese yen fell 0.04% to 133.20 per dollar.

To $0.669, the Australian dollar decreased by 0.01%. The kiwi dropped to $0.621 by 0.23%.

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