Dollar rises despite softer U.S. inflation data

by Jonathan Adams
dollar jumps

The US Dollar Index edged up 0.03% to 91.868

The dollar rose on Monday morning in Asia despite slightly softer than expected U.S. inflation data. Investors remained concerned about a tightening monetary policy if the consumer price pressures continue to intensify.

The US Dollar Index edged up 0.03% to 91.868 by 2:33 AM GMT.

The USD/JPY pair edged down 0.08% to 110.69 after the Bank of Japan released its summary of opinions earlier in the day. Policymakers expected prompt economic recovery due to the accelerating COVID-19 vaccination.

A positive economic cycle is kicking off in Japan due to progress made in vaccinations, one of the nine board members said.

The AUD/USD pair edged down 0.01% to 0.7585 and the NZD/USD pair edged down 0.03% to 0.7070.

The USD/CNY pair inched up 0.13% to 6.4631.

Data released on Sunday said the Chinese industrial profit rose 36.4% year-on-year (YOY) in May, below the 57% growth during the previous session.

The GBP/USD pair edged up 0.04% to 1.3882, with Andrew G Haldane, a member of the Bank of England Monetary Policy Committee, due to speak later in the day.

Although inflation is expected to slow at the end of 2021, investors remain cautious about price pressures driven by wages due to a tight labour market.

Investors now await nonfarm payrolls in June, due on Friday. It was 559,000 in May and was expected to rise 675,000 in June.

Depending on the outcome of the payroll’s data, the market could start pricing in more chances of a rate hike next year, Yukio Ishizuki, senior currency strategist at Daiwa Securities, told Bloomberg.

Meanwhile, investors remained optimistic about the ongoing economic recovery after U.S. President Joe Biden said he didn’t plan to veto a $1.2 trillion bipartisan infrastructure bill if a separate Democratic spending plan doesn’t pass Congress.

That statement understandably upset some Republicans, who do not see the two plans as linked. My comments also created the impression that I was issuing a veto threat on the very plan I had just agreed to, which was certainly not my intent, Biden said in a statement.



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