TOKYO — The US dollar stabilized on Wednesday following its biggest decline in more than three weeks overnight, with softer-than-expected US consumer inflation data bolstering the case for Federal Reserve easing just as global trade tensions cool.
The Labor Department said the consumer price index increased 0.2 percent last month, below expectations of economists polled by Reuters for a 0.3 percent gain, after dipping 0.1 percent in March.
At the same time, inflation is likely to pick up in the coming months as US tariffs lift the cost of imported goods, although the outlook for US trade has improved following an agreement with Britain last week and weekend talks with China that yielded a 90-day truce in their tit-for-tat tariff war.
US President Donald Trump said earlier this month he has “potential deals” with India, Japan and South Korea.
The US dollar index, which measures the currency against six major peers, was flat at 100.94, following a 0.8 percent slide on Tuesday.
The index had jumped 1 percent on Monday and touched a one-month peak on optimism that a de-escalation in Sino-US trade tensions would avert a potential global recession.
The dollar was steady at 147.45 yen, while the euro and sterling were little changed at $1.1188 and $1.3311, respectively.
The dollar was flat at 0.8390 Swiss franc, and held at 7.1928 Chinese yuan in offshore markets, after dipping to a six-month low of 7.1791 yuan on Tuesday.
“Despite the easing of the USD overnight, we consider there is more upside to the USD in the near term as market participants reassess the outlook for the US and global economies following the temporary US China trade deal,” Commonwealth Bank of Australia analysts wrote in a client note, predicting a 2-3 percent rise in the dollar index over “the next few weeks.”
