Investors Turn a Blind Eye to Inflation Figures And ECB is Dovish

After a week of anxious waiting, the markets received the high US inflation number they had been dreading, then shrugged it off and moved on, leaving the USD under pressure and most of the major currencies stuck in tight ranges.

In early trading in the Asian session, the dollar incurred limited losses, as traders believed that there were enough exceptional gains within the 0.6% increase in consumer prices last month to support the US Federal Reserve’s insistence that inflation is likely to be temporary.

The dollar reached 109.44 yen and is heading towards recording a limited weekly loss. It is also on the path of incurring modest weekly losses against the Australian dollar and the British pound, and recorded in the latest trading of 0.7752 dollars against its Australian counterpart and 1.41825 dollars against the British currency.

Dovish comments from the European Central Bank on its commitment to a high pace of bond-buying caused the euro to remain at $1.2189.

Yesterday’s data showed that US consumer prices rose 5% on an annual basis, the largest increase in more than a decade, and core inflation rose 0.7 percent on a monthly basis. But big contributions from short-term hikes in airline tickets and used cars have convinced dealers that they won’t drive interest rates up any time soon.

The dollar index fell slightly after the publication of inflation data and settled in the latest trading at 89.974, declining very slightly during the week.

The focus now turns to the US central bank meeting next week, but traders are now saying there may not be much shift in his rhetoric that diminishes the need to scale back stimulus.

The South Korean won rose 0.2% to 1110.08 per dollar after the central bank governor hinted at returning policy to normal in an advance version of a speech later in the day.

Cryptocurrencies are looking to end the week higher, as Bitcoin appears to be well supported above $35,000 despite more talk of scrutiny from regulators globally.

Bitcoin was last traded at $37163.52 and is on track to advance 3.5% on a weekly basis.