US Dollar declines despite data

Story link: US Dollar declines despite data

New data that showed consumer prices up 2.4 percent in the UK in September, down from August’s figure of 2.5 percent, did nothing to change the opinion of most analysts that the Bank of England will raise interest rates again in September. Most of the declines was said to be due to dropping oil prices, while pressures toward inflation remained in place in other sectors. In addition, the UK retail price index was up to an annual 3.6 percent in September, further increasing the likelihood of a rate hike.

All this news helped sterling to add 0.4 percent to £0.6707 against the euro and to gain 0.5 percent versus the US dollar to $1.8700 by mid-afternoon trade in New York on Tuesday.

The dollar was also lower in relation to the euro, dropping 0.1 percent to $1.2540, despite new data which showed capital inflows into the United States higher than had been predicted and a drop in September’s industrial production in the US. The new data was dismissed by some analysts as being of little significance.

The yen continued to get help from Monday’s news from Russia that it was buying more of the Japanese currency for its foreign exchange reserves. This was notable for a couple of reasons. Not only are Russia’s reserves the third largest in the world, but new buying by Russia could lead to purchases by other central banks, which currently are deficient in yen holdings.

The Japanese currency added 0.2 percent to ¥148.90 in relation to the euro, while it gained 0.3 percent to ¥118.65 versus the US dollar.