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U.S. Dollar Slips Despite Better-Than-Expected Labor and Inflation Data

4/12/2019, 3:29:06 PMMarket Analysis
U.S. Dollar Slips Despite Better-Than-Expected Labor and Inflation Data

The U.S. dollar edged down on Friday in Asia despite better-than-expected labour and inflation data released overnight.

The U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.2% to 96.597.

The Labor Department reported on Thursday that its core producer price index (PPI) for final demand increased 0.3% last month, above economists' forecasts for a 0.2% increase. In the 12 months through March, the core PPI rose 2.4%.

It also reported that initial jobless claims dropped by 8,000 to a seasonally adjusted 196,000 for the week ended April 7, confounding expectations for a rise.

"Many market players had taken a bearish view on the dollar after the U.S. CPI numbers released earlier in the week, but they were forced to abruptly cover short positions as Thursday's data proved to be strong," said Takuya Kanda, general manager at Gaitame.Com Research Institute, in a Reuters report.

"The rise thus lacked conviction and it remains to be seen if the dollar can sustain its bounce. The prospect of a rate cut by the Fed may have diminished in light of the data, but economic views are not yet strong enough to support rate hike expectations," Kanda said.

The minutes of the Federal Reserve’s last policy meeting, released Wednesday, said various Fed officials thought that the appropriate level for rates could “shift in either direction”.

Earlier this year, the Fed said that the next move in U.S. interest rates may be down rather than up.

Meanwhile, the GBP/USD pair edged up 0.2% to 1.3072 after the European Union agreed to push back the U.K.’s departure date as far as Oct. 31.

The AUD/USD pair also inched up 0.1% after the release of the Reserve Bank of Australia’s (RBA) latest financial stability review.

The RBA cited the housing market as a risk to the Australian economy while signalling a slower pace of global growth. Growth forecasts were downgraded amid risks of a sharper downturn, the central bank said.

The USD/CNY pair was unchanged at 6.7189.

The USD/JPY pair was up 0.1% to 111.74.