Forex - Dollar Under Pressure as Euro, Yen Race Ahead
Investing.com – The dollar traded lower against a basket of major currencies as sharp rallies in both yen and euro weighed on upside momentum ahead of a crucial consumer inflation report due Wednesday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.49% to 89.57.
USD/JPY fell to 0.92% to Y107.66 on expectations that the Bank of Japan (BoJ) was poised to start reining in loose monetary policy measures despite expectations that BoJ governor Kuroda – who has repeatedly affirmed the need for accommodative monetary policy – would be reappointed for a second term.
The sharp decline in the dollar comes against somewhat hawkish comments from Cleveland Fed president Loretta Mester who said Tuesday that she expects tax cuts to add to growth, presenting upside risk, while inflation is expected to gradually rise to 2% over next one to two years, creating the need for further Federal Reserve rate hikes in 2018 and 2019.
The dollar has made a poor start to the week, heading for a second-straight daily loss, as investors await consumer inflation data due Wednesday, which offer markets with fresh direction.
EUR/USD rose 0.56% to $1.2361, while GBP/USD gained 0.32% to $1.3883 as the latter was supported by data showing UK inflation rose 3% to remain close to five-year highs.
USD/CAD rose 0.14% to C$1.2597 as falling oil prices continued to weigh on the loonie.