SYDNEY- The dollar was below key support levels on Thursday, having hit new lows overnight, after data showing US consumer prices rose at their fastest rate in nearly 40 years was not deemed worrying enough to change an already hawkish rates outlook.
After a couple of months in a tight range, the dollar dropped 0.6 percent on the euro overnight to $1.1453, its lowest since mid-November. There isn’t major chart resistance to further losses until $1.1525. It held at $1.1443 in Asia.
It also fell 0.6 percent on the yen, dropping through support around 115 to hit 114.38 yen per dollar, a more than two-week low. It last bought 114.63 yen early on Thursday.
Risk-sensitive currencies benefited. The Australian dollar rose more than 1 percent, its best percentage gain since October, and zoomed through its 50-day moving average to an almost two-month top of $0.7292.
Monthly US inflation figures were a fraction higher than forecast and at 7 percent, the increase in year-on-year CPI was the biggest since June 1982.
But the Federal Reserve has already flagged higher rates this year and a shrinking balance sheet to curb it. Fed funds futures have already priced three hikes in 2022 and some dollar longs started bailing out since so much is already priced in.
“I don’t think it was anything within the components of the CPI that caused the market to take a sigh of relief,” said NatWest markets’ strategist Jan Nevruzi in a note.
