© Reuters.
By Peter Nurse
Investing.com – The US dollar rose in early European trade on Thursday, but remained under pressure after cooler-than-expected inflation data raised the possibility of an early end to the Federal Reserve’s rate-tightening cycle.
At 02:00 ET (06:00 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading 0.1% higher at 101.243, above a two-month low of 101.138 seen earlier in the day. The session after falling 0.6% overnight.
Data on Wednesday showed the United States rose 0.1% in March, leading to 5.0%, the smallest gain in 12 months since May 2021.
This was lower than the expected 5.2%, but underlying inflation pressures remained strong and, excluding volatile food and energy prices, rose 5.6% year-on-year, up from 5.5% in the previous month.
These numbers likely mean that the Federal Reserve will raise interest rates again next month.
However, expectations are growing that the US central bank will cut interest rates before the end of this year, especially after the last meeting of the Federal Reserve in March showed expectations of a mild recession later this year.
Thursday brings more inflation data in the form of, which is expected to be moderate than the same time last year, which is expected to be higher than the previous week.
It fell to 1.0987, after touching a two-month high of 1.1005 earlier in the session, with interest rate hikes likely to continue for longer than their US counterpart in order to rein in higher prices.
“We may still have a small way forward in raising interest rates at our next meetings,” François Villeroi de Gallau, president of the French central bank, said in an interview on Wednesday, although I think it is too early to decide now what we will do with May. .”
German inflation data, released earlier on Wednesday, showed just how hard the European Central Bank is facing, as the eurozone’s dominant economy rose 0.8% in March, up 7.4% on a basis.
It rose by 0.1% to 1.2488, trading near levels last seen in late May last year, while remaining in double digits, after being surprised by an acceleration to 10.4% in February.
Elsewhere, it rose 0.2% to 0.6701 after strong data opened the way for the bank to continue its rate hike cycle.
It rose 0.1% to 133.30, while falling slightly at 6.8744, with the yuan struggling to benefit from a surprising rebound in the month of March.