Dollar steady after sticky U.S. inflation data

by Jonathan Adams

The dollar index started the week 0.058% lower at 104.14 after clocking five successive weeks of gains

The dollar was steady Monday after data last week showing U.S. inflation remained sticky cast doubts on when the Fed would start its easing cycle, while the yen remained rooted near the 150 per dollar level.

The yen has stayed near the 150 level in the past few days, prompting officials to comment on the currency moves and keeping markets on alert to a possible intervention by Japanese authorities.

In early trade on Monday, the yen firmed 0.20% to 149.94 per dollar but remains 6% lower for the year, while against the euro yen stayed near three-month lows of 161.925.

Ministry of Finance officials “took the first step onto the intervention escalation ladder by warning against rapid moves and threatening action even outside of its time zone,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.

He said there seems little on the charts to deter a test to last year’s low of 152 per dollar level.

The dollar index started the week 0.058% lower at 104.14 after clocking five successive weeks of gains. The index is 3% higher this year.

Data last week showed both U.S. producer prices and consumer prices rose more than expected in January, with the apparent stickiness in inflation raising the prospects of a delayed start to the Fed’s interest rate cuts.

Citi strategists said data last week confirmed that an economic soft landing has not been achieved and “make us more convinced that one will not be.” Dropping retail sales, and the continuing rise in jobless claims all point to a softening economy, they stated in a note.

And higher inflation makes it even more difficult for the Federal Reserve to respond by cutting rates, further raising the probability of a recession, they said.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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