Economic data drives currency trade

Economic data drives currency trade

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Sterling weakened on Tuesday after new consumer price inflation data in the UK showed the CPI was up only 0.3 percent in April. This brought the annual rate of inflation down to 2.8 percent, from 3.1 percent in March, and made it less likely that the Bank of England will raise interest rates again in June.

The UK currency dropped 0.2 percent versus the euro and was down to $1.9750 in relation to the greenback. However, later in the session the pound took back its losses against the US currency and by mid-afternoon in New York the dollar stood 0.2 percent lower versus sterling at $1.9830. This was the result of lower than anticipated CPI numbers from the US as well. The greenback also lost ground to the euro, to $1.3590 in relation to the shared currency.

The yen was also weaker early after a new report showed that machinery orders in Japan were lower than had been expected. However, the Japanese currency made a comeback to hold steady at ¥120.30. Investors were also cautious ahead of new Japanese gross domestic product data, due Thursday.

The Canadian dollar added 0.7 percent to C$1.0980 versus the US dollar after the news that Canadian manufacturing shipments were up in March.