In early European trade, the US dollar rose after US consumer inflation (CPI) picked up in January. Meanwhile, sterling experienced a fall after the UK CPI rate cut.
The dollar index (DXY), traded 0.34% higher at 103.458.
US CPI was at 6.43% in January, short of the 6.2% analysts forecast. Moreover, a broadly viewed year-over-year gauge that takes in volatile products such as food ad energy came in flat by 5.63%, ahead of the forecast of 5.5%.
The numbers insinuate that taming inflation is difficult, after a series of interest rates, opening the possibility that the Fed could see a higher endpoint for this hike than the market initially imagined.
US retail sales figures will be released later in the session. These figures will tell us how US consumers are doing after the Fed raised rates last year.
What about euro, sterling and yen?
GBP/USD dropped 0.62% to 1.2095 after U.K. annual inflation fell to 10.12% in January, down from 10.54% the previous month. While it was a bigger-than-expected fall and the third straight month of declines, it remains more than five times the Bank of England’s 2.4% target.
EUR/USD dropped 0.22% to 1.0709, with euro-dollar buying catching the euro ahead of ECB head Christine Lagarde’s speech.
Lagarde said the ECB would continue to raise interest rates massively to slow down inflation, which has remained too high, and traders will be looking to see if it moderates that attitude.
USD/JPY experienced a 0.22% gain to 133.34. At the same time, risk-sensitive AUD/USD fell 1.5% to 0.691.
Germany’s 10-year bond yield, the eurozone’s benchmark, fell 2 basis points to 2.43%, hitting a six-week high of 2.448%.
Germany’s two-year yield also fell 2 bps to 2.83%, from the previous day’s more than 14-year high.
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