U.S. Dollar Pares Back Gains After Inflation Data
The dollar pared back earlier gains on Wednesday after inflation data supported the Federal Reserve increasing rates at a gradual pace.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.27% to 96.88 as of 11:15 AM ET (16:15 GMT).
Data on Wednesday showed that the annual core consumer price index (CPI) rose 2.1%, which was less than expected.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
The dollar was flat against the Japanese yen, with USD/JPY at 113.81. The Canadian dollar was higher, with USD/CAD falling 0.03% to 1.3235.
Sterling increased on news that the European Union and the UK have reached a draft agreement on Brexit. A statement from British Prime Minister Theresa May is expected at 12:00 PM ET (17:00 GMT).
GBP/USD rallied 0.25% to 1.3011
Meanwhile, the euro edged higher, but was held back by a row between Brussels and Rome over Italy’s budget. The European Commision rejected Italy’s 2019 budget because it breaches EU fiscal rules, but Italy has stuck to its target in a re-submitted draft budget.
EUR/USD increased 0.19% to 1.1310.
Elsewhere, the NZD/USD rose 0.37% to 0.6789, while AUD/USD inched down 0.03% to 0.7215.