Please use symbol entry at top right of page to search

FOREX-Dollar slides further after U.S. inflation surprise

By Iain Withers

LONDON, Aug 11 (Reuters) - The dollar lost further ground versus other major currencies on Thursday, after traders reined in bets on an aggressive interest rate hike by the Federal Reserve after softer-than-expected U.S. inflation data the previous day.

The dollar index remained on the back foot in early European trading hours, slipping 0.2% to 105.010, after recording its biggest daily fall in five months, of 1%, the previous day.

Data on Wednesday showed U.S. consumer prices were unchanged in July, month on month, after advancing 1.3% in June.

"Yesterday's data gave hope that inflation has peaked and the Fed will need to raise rates less sharply to keep inflation under control," currency analysts at Commerzbank said in a note.

Traders pared bets the Fed would raise rates by 75 basis points for a third straight time at its September policy meeting, and now see a half-point increase as the more likely option.

Fed policymakers sought to temper any expectations of significantly looser policy, with Neal Kashkari telling a conference on Wednesday that the central bank was "far, far away from declaring victory" on inflation.

"While yesterday's data clearly reduces the risk of further aggressive Fed action (+75bps) and therefore helps curtail US dollar demand, we equally see it as unlikely that this data alone will prompt much further US dollar selling from here," currency analysts at MUFG said in a note.

The euro and Japanese yen were among the currencies to benefit from the dollar's weakness and both added to the previous day's gains.

The euro was last up a quarter of a percent at $1.03255.

The yen gained 0.2% to 132.615 yen per dollar.

Sterling was broadly flat versus the dollar at $1.22250, after gaining more than 1% the previous day.

(Reporting by Iain Withers; Editing by Toby Chopra)

Copyright © Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

Search News

Filter Results

Publication Date
Topic
Provider
  • All

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.