Dollar shows resilience after soft US inflation data

The US dollar fell across the board after softer than expected US inflation data on Thursday but in another sign of dollar resilience, it recovered all the losses in the following hours and rebounded.

In a world where no other major central bank is raising interest rates, except the Federal Reserve, this underscores the lack of alternatives and this is helping support the greenback.

Consequently, the dollar shrugged off the US CPI data which showed consumer prices rose less than expected in March and underlying inflation slowed. The consumer price index gained just 0.1 percent last month, which offset an upbeat labor market report showing a decline in initial jobless claims.

The dollar index, which gauges the USD against a basket of major currencies, rose about 0.1 percent to 94.977, up 0.8 percent for the week.

USDJPY gained 0.1 percent to 109.52 yen and is on course to gain 1.4 percent for the week after moving off from this week’s 17-month low of 107.63.

EURUSD slid about 0.1 percent to $1.1255, moving away from a six-month high of $1.1465 touched on Tuesday. The euro is on track to lose about 1.3 percent for the week.

GBPUSD was down 0.1 percent to $1.4136, recovering slightly from a low of $1.4091 touched yesterday. The Bank of England policy announced its decision to keep interest rates at a record low of 0.5 percent after a unanimous vote by MPC members.

Data in focus today came out of China which showed growth slowed in the first quarter of this year. GDP grew 6.7 percent in Q1 from a year earlier, which was in line with expectations. But this was the slowest pace of growth in the world’s second largest economy in seven years. There was muted reaction in the markets after the data as the number was in line with forecasts.

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