Dollar Weakens After Tame Inflation Report
WASHINGTON (Alliance News) - The dollar is losing ground against its major rivals Tuesday afternoon. Today's rather tepid inflation report has investors betting that the Federal Reserve will likely only be able to hike rates three times this year. Traders were also rattled by the news that President Donald Trump plans to replace Secretary of State Rex Tillerson with CIA Director Mike Pompeo.
A report released by the Labor Department on Tuesday showed consumer prices in the US increased in line with economist estimates in the month of February. The Labor Department said its consumer price index rose by 0.2% in February after climbing by 0.5% in January. Economists had expected consumer prices to rise by 0.2%.
The dollar rose to an early high of USD1.2313 against the Euro Tuesday, but has since dropped to around USD1.24.
France's payroll employment increased in the fourth quarter, the statistical office Insee reported Tuesday. Net payroll job creation reached 72,700. Job creation grew 0.3% after rising 0.2% in the previous quarter.
The Chancellor of the Exchequer Philip Hammond revised up the growth forecasts for this year, while projecting a narrow deficit in order to reduce public debt levels.
In his spring statement, Hammond upgraded growth forecast to 1.5% in 2018, up from the 1.4% previously expected.
The Office for Budget Responsibility said the government borrowing is expected to be GBP 45.2 billion in the 2017-18 fiscal year, GBP 4.7 billion lower than the projections it made in November.
Hammond said that there was "light at the end of the tunnel" for the UK economy. "Another step on the road to rebuilding the public finances decimated by the party opposite."
The buck reached a high of USD1.3873 against the pound sterling Tuesday, but has since tumbled to a 2-week low of USD1.3980.
The greenback climbed to an early high of Y107.291 against the Japanese Yen Tuesday, but has since retreated to around Y106.650.
Producer prices in Japan were flat on month in February, the Bank of Japan said on Tuesday. That was shy of expectations for an increase of 0.2% and down from 0.3% in January.
Japan's tertiary industry activity declined for the first time in four months in January, data from the Ministry of Economy, Trade and Industry showed Tuesday.
The tertiary industry activity index dropped 0.6% month-on-month in January after staying flat in December. This was the first decrease since September. Activity was expected to drop moderately by 0.3%.
Copyright RTT News/dpa-AFX
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