Why is the USD Falling Despite Strong US Inflation Data? - Kakiforex.com - Financial Market Media No. 1 in the World Why is the USD Falling Despite Strong US Inflation Data? Why is the USD Falling Despite Strong US Inflation Data?

April 14, 2021

Why is the USD Falling Despite Strong US Inflation Data?

 Unexpectedly, the greenback dollar fell to a three -week low after data showed inflation recorded a stronger -than -expected rise in March.


The consumer price index, which is a measure of inflation, recorded the biggest increase since August 2012, with a 0.6% jump last month after rising 0.4% in February. Core inflation (excluding food and energy components) increased by 0.3%.


Speculation that stronger inflation will push the Federal Reserve (Fed) to cut quantitative easing and interest rates earlier, has been the main driver of the dollar’s ​​rise in the first quarter.



However, after witnessing the latest data, the US dollar appears to have failed to make higher gains and instead slipped to a three -week low against most major currencies.


This was driven by a decline in 10 -year U.S. treasury yields that were initially slightly higher at the start of the New York trading session, before moving back downwards. The 30 -year bond auction that went on yesterday showed high demand, causing bond yields to plummet.


In the Asian session, the benchmark 10 -year bond yield traded lower around 1.616%.