SINGAPORE – The dollar was pinned near two-week lows on Thursday, as softer-than-expected US inflation and another Federal Reserve promise to keep interest rates low reinforced expectations of meagre returns from the reserve currency.
The Australian dollar sat just below a two-week top touched overnight, while the euro held at $1.2116, near its highest since Feb. 1. Sterling, also boosted by receding expectations for negative interest rates in Britain, sat just shy of Wednesday’s nearly three-year peak of $1.3865.
Morning moves were slight and Asia trade was thinned by Lunar New Year holidays in Japan and China. Against a basket of currencies the dollar sat at 90.428 after touching a two-week trough of 90.249 in the wake of US inflation figures.
US core inflation last month was zero, data showed on Wednesday, against market expectations of 0.2 percent.
In a speech, Fed Chair Jerome Powell focused on still-high unemployment and re-iterated that the central bank’s new policy framework could accommodate annual inflation above 2 percent for some time before hiking rates.
“In other words, easy policy is going to stay there for a long, long time, and that should be negative for the US dollar,” said Westpac currency analyst Imre Speizer. – Reuters