The dollar rose strongly from its lows on Wednesday following economic data showed that inflation is unlikely to prompt the Federal Reserve (the US central bank) to adjust its active course of tightening monetary policy.
The US Labor Department said on Wednesday that its consumer price index rose 0.3 percent last month, the smallest rise since August, compared to a 1.2 percent month-on-month rise in the consumer price index in March, which marked the largest jump since September 2005.
On an annual basis, the consumer price index rose 8.3 percent, compared with expectations of 8.1 percent, but down from 8.5 percent in the previous month. The dollar index, which measures its value once morest six currencies, fell to 103.37 before the data was released, but it jumped immediately following its publication to hit its highest level in the session 104.13, close to a 20-year high of 104.19 on Monday.
However, trading witnessed volatility, as the US currency fell from its high levels and was traded in the latest trading, down 0.279 percent to 103.640. The euro rose 0.23 percent to $1.0551.
The dollar has appreciated more than 8 percent this year as the US central bank tightens its monetary policy. The bank raised its overnight interest rate by 50 basis points last week, the highest increase in 22 years. Markets absorbed another expected rise of at least 50 basis points in June, according to the Federal Reserve’s Open Market Committee.
The euro rose following the European Central Bank reiterated expectations that it will raise its benchmark interest rate in July for the first time in more than a decade to fight record inflation, with some policymakers on Wednesday hinting at further hikes later. The yen rose 0.08 percent to 130.33 yen to the dollar, while the pound sterling was traded in the latest trading, up 0.28 to 1.2357 dollars.
The price of the cryptocurrency bitcoin fell 4.35 percent to $2,9651.09, following falling below 30,000 on Tuesday for the first time since July last year.