Sterling stronger on new CPI data

Story link: Sterling stronger on new CPI data

The US dollar was lower on Tuesday ahead of the Federal Reserve’s latest decision on interest rates as new data showed the US trade deficit dropped to its lowest level in 14 months in October, to $58.9 billion. Traders were interested not so much in the Fed’s decision, which was widely expected to keep the interest rate at 5.25 percent, where it has been since June, as they were in the comments that were to come with the announcement of the decision. At mid-afternoon in New York, the US dollar had dropped 0.1 percent versus the euro to $1.3250.

The Japanese yen, meanwhile, dropped 0.1 percent against the euro to ¥155.1 after having dropped to ¥155.00, a new all-time low earlier in the session. The yen was also down 0.1 percent versus the Swiss franc, to ¥97.35, while it fell 0.6 percent to ¥230.25 against sterling. The Japanese currency remained steady at ¥117.00 in relation to the greenback. The yen was hurt by a reduced chance that the Bank of Japan will raise interest rates when it meets on December 19 after new economic data that was weaker than expected.

Sterling was stronger, adding 0.4 percent to £0.6732 versus the euro and gaining 0.5 percent to $1.9670 against the US dollar on higher inflation. The new Consumer Price Inflation numbers will likely add to the speculation that the Bank of England will raise UK interest rates after the first of the year.