Dollar reverses gains on higher US inflation data
Data out of the US showed that the 5-year breakeven inflation rate moved to 2.25% the highest level since 2013. This unexpected data along with month-end rebalancing flows has put downward pressure on the greenback. The Bloomberg Dollar Index has reversed earlier gains of as much as 0.4% and is currently trading 0.1% lower.
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January 29, 2021
EUR/USD 1.2146 GBP/USD 1.3725 USD/CAD 1.2775 AUD/USD 0.7677 USD/JPY 104.80 USD/CNH 6.4450 USD/ILS 3.2825 USD/MXN 20.1690 USD/CHF 0.8882 USD/INR 72.9500
USDIn European trading, the Bloomberg Dollar Index strengthened as much as 0.4% and was on track for a 0.6% gain for the week. Higher USD has been supported by strong technical FX levels and a risk-off sentiment, also leading to a fall in global equities. The dollar uptrend has since reversed, following this morning's data that showed that the (forward-looking) breakeven inflation rate in the US rose more than expected.GBP
Sterling fell earlier in the session in response to a move to the safe haven dollar and amid concerns of unusual volatility in the stock market. The currency has since reversed along with broad USD weakness, hitting a high of 1.3751.EUREUR/USD is trading 0.2% higher and hit 1.2156. The currency pair is on track for a slight loss this week following comments from an ECB official stating that the bank has tools to prevent unwelcome continued appreciation in the euro.CAD
USD/CAD had its biggest one-day drop since January 20 and is currently trading near 1.2750. Data out of Canada showed that the economy grew more than expected, which supported the loonie.ASIA/PACIFIC
USD/JPY surged to highest level in over two months, hitting 104.94 and strengthening as much as 0.7%. The currency pair is on track to gain 0.9% for the week.
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