Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Edges Lower; Inflation Concerns Prompt Strong Week

ForexMay 14, 2021 17:48
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Peter Nurse - The dollar edged lower in early European trade Friday, taking a breather after the week’s gains, as traders digest the latest inflation data and the potential impact on Federal Reserve policy.

At 3:05 AM ET (0805 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 90.532, but still around 0.5% higher so far this week. 

EUR/USD traded 0.3% higher at 1.2109, GBP/USD was up 0.1% at 1.4068, and USD/JPY was down 0.1% at 109.39. Additionally, AUD/USD rose 0.2% to 0.7744, while NZD/USD rose 0.3% to 0.7192.

Thursday saw the release of factory gate price data in the U.S., with the producer price index rising 0.6% in April after surging 1.0% in March. The annual figure shot up 6.2%, the biggest year-on-year rise since the series was revamped in 2010 and followed a 4.2% jump in March. 

This strong data adds to Wednesday’s stunning jump in consumer prices, suggesting inflationary pressure is building up in the United States as vaccine rollouts prompt a reopening of an economy bursting at the seams with stimulus.

That said, Federal Reserve officials have been at pains to point out that they had expected a spike in inflation and that it would prove to be temporary, the latest being Fed Governor Christopher Waller.

“The factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery,” Waller told a virtual event Thursday. “We will not overreact to temporary overshoots of inflation.”

Benchmark 10-Year U.S. Treasury yields failed to rise to any great degree after the PPI data, and now trade around 1.65%.

“Although we are likely to see blockbuster growth in the second half of the year, economic growth will likely slow next year, to strong but less impressive growth rates,” said analysts at ABN Amro, in a note. “Overall, we do not expect sustained high inflation over the coming years, but it is certainly the risk to watch.”

For today, the focus will be on U.S. retail sales for April, which should remain strong after the impressive 9.7% rise in March, as well as industrial production numbers and consumer sentiment for May.

Dollar Edges Lower; Inflation Concerns Prompt Strong Week

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email