HomeFinancial MarketsDollar Falls Ahead of Release of Inflation Data

Dollar Falls Ahead of Release of Inflation Data

The U.S. dollar declined in strength against other major currencies on Tuesday as U.S. investors brace themselves for the latest round of key inflation data set to be released on Wednesday.

Consumer price data is expected to show that headline inflation rose by 0.2% in March, with core inflation advancing by 0.4%. As a result, the Federal Reserve is expected to raise its interest rates by 25 basis points at its May 2-3 meeting before pausing in June.

Last week’s jobs report from the Labor Department indicated that the U.S. labor market remains strong, thereby giving strength to the argument that another Fed interest rate hike will be implemented during the next policy meeting.

“A lot of traders are focused on this inflation data,” Edward Moya, senior market analyst at OANDA in New York observed. “Everyone’s trying to get a sense of does the disinflation process return and does this complicate what the Fed does.”

The dollar index fell by 0.26% to 102.20 on Tuesday, with the euro rising 0.41% against the dollar to $1.0906. The sterling was up 0.29% against the dollar at $1.2418.

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