The US dollar eased slightly at the start of the European session, with movements of other major currencies also limited after profiting from readings of US inflation data showing a slowdown in July.
The dollar index traded around 92.85 against a basket of major currencies, down from a four -month high of 93.19 it reached on Wednesday.
The next market focus is on the production of US producer price index (PPI) data tonight which is also expected to show a slower increase than the previous reading.
Earlier, slowing growth in the US consumer price index (CPI) in July had supported the Federal Reserve’s (Fed) view that inflation was temporary, thus reducing market expectations for a faster stimulus cut from the Fed.
Still, some Fed policymakers continue to issue hawkish statements in readiness to reduce bond purchases. Robert Kaplan says the central bank should announce a timeline to reduce massive bond purchases next month and start lowering them in October.
This caused the US dollar to continue to hold around the highest levels against other major competitors despite a slight decline.
Meanwhile, the euro continued to try to record a recovery by climbing back from its lows amid the depreciation of the US dollar. However, the gains recorded were somewhat limited due to the absence of key economic data to support a stronger recovery.
Meanwhile, the gains recorded by the antipodean currency were also limited as the threat of a Covid-19 contagion in Australia continued to weigh on Aussie dollar trading.
The kiwi dollar, on the other hand, failed to rise further despite rising inflation expectations. The trade gloom was due to New Zealand Prime Minister Jacinda Ardern who said the country was not yet ready to reopen fully.
