Investing.com – The dollar traded lower against a basket of major currencies as market participants questioned whether the faster pace of inflation would continue while an “ugly” retail sales report added to downside momentum.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.61% to 89.05.
The Labor Department said Wednesday its rose 0.5% last month after rising 0.2% in December, while year-on-year CPI grew to 1.8% from 1.8% in December.
The Commerce Department, meanwhile, said on Thursday that retail sales fell , confounding expectations for a 0.2% rise.
After an initial surge higher the dollar retreated sharply as market participants highlighted that a large increase in apparel and medical services prices accounted for the jump in consumer prices and questioned whether these two components would continue to post strong gains in the months ahead.
Pantheon said apparel prices have long been under pressure so the rebound seen in January’s inflation report was somewhat expected, while the rise in medical services prices were driven by a jump in the hospital component, which is expected to correct in February’s inflation report.
That said, however, Pantheon remained confident that the underlying trend of inflation remained strong enough to allow the Federal Reserve to continue on its tightening path. Pantheon said it expects the Federal Reserve to hike rates four times in 2018.
JPMorgan slashed its first quarter US GDP forecast to 2.5% from 3%, citing “scorching” CPI data and “ugly” retail sales data as headwinds.
Also weighing on the greenback was ongoing yen strength as fell 0.91% to Y106.84 amid ongoing expectations that the Bank of Japan (BoJ) was poised to start reining in loose monetary policy measures.
gained 0.76% to $1.3994 while rose 0.65% to $1.2431.
fell 0.51% as the pair came under pressure following a rebound in oil prices amid a smaller than expected increase in US crude stockpiles.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Latest posts by investing.com (see all)
- Forex – Dollar Off Lows as Euro Reverses Gains, Trade Concerns Linger - September 18, 2018
- ECB's Villeroy urges deal on bank resolution backstop by end of year - September 18, 2018
- Turkish Lira Slides for Third Day as Rate-Hike Euphoria Fades - September 18, 2018