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US dollar struggles ahead of Fed announcement

H.S. Borji
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US dollar struggles ahead of Fed announcement

The US dollar was lower against a basket of currencies, as a spate of economic data from Europe and the United States kept the markets speculating ahead of the Federal Reserve’s April rate decision.

Eurozone inflation edged higher in April, the European Commission reported today. Consumer prices in the 18-nations that share the euro rose 0.7 percent annually in April, up from 0.5 percent the previous month that was also the lowest in four years. Economists forecast consumer inflation to rise 0.8 percent.

The so-called core index, which excludes volatile products such as food, alcohol and tobacco, rose 1 percent, official data showed.

In the mid-day session the EURUSD pair was trading at 1.3869, up 0.4 percent.

The British pound continued to climb against the greenback despite a dearth of economic data from the UK. Sterling surged 0.4 percent to 1.6888. The pair is still reacting to Tuesday’s GDP report, courtesy of the Office for National Statistics, which said the UK’s GDP expanded 3.1 percent annually in the first quarter, compared to 2.7 percent in Q4.

The Japanese yen was firmer after the Bank of Japan kept its key interest rate unchanged at 0.1 percent. In the mid-day session the USDJPY pair was down half a percent to 102.1350.

US data were mixed Wednesday, which could complicate the Federal Reserve’s monetary policy statement later in the day. The US economy expanded a mere 0.1 percent annually in the first quarter, as exports and business inventories waned.

Despite the broad slowdown in the first quarter, recent data suggest the US economy is rebounding strongly. Latest data from the ADP Institute showed American employers added 220,000 payrolls in April, following a revised gain of 209,000 the previous month. Official employment data courtesy of the Labor Department will be released Friday.

As of 11:45 AM EST, the US dollar index was at 79.48, down 0.4 percent.

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