Dollar Recovers After Initial Fall, But Stays Weak Against Peers

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After opening lower Friday morning, extending its slide from previous session, the U.S. dollar recovered to move above the flat line as the session progressed after data showed U.S. consumer inflation improved more than forecast in August.

A report released by the Labor Department today showed consumer prices in the U.S. increased by slightly more than anticipated in the month of August.

The report said the consumer price index climbed by 0.4% in August after advancing by 0.6% for two straight months. Economists had expected consumer prices to rise by 0.3%.

Excluding food and energy prices, core consumer prices still rose by 0.4% in August following a 0.6% increase in July. Core consumer prices were expected to edge up by 0.2%.

The dollar index, which dropped to 93.10, losing more than 0.25% in the process, recovered to 93.38 by early afternoon, and was last seen at 93.27, down just 0.07% from previous close.

Against the Euro, the dollar was down more than 0.25% at $1.1847, after falling to a low of $1.1875 earlier. The Euro was stronger against most of its peers today, riding on ECB President Christine Lagarde’s optimistic assessment on Eurozone economy and soft approach to the currency’s strength. She said that the ECB would “carefully” monitor the exchange rate, but it is not a monetary policy tool.

Germany’s consumer prices were unchanged in August after a 0.1% fall in July, data from Destatis showed.. Compared to the previous month, the index decreased 0.1%.

The Pound Sterling was weaker by nearly 0.1% at $1.2799 after having firmed up $1.2859 in the Asian session. Data published by the Office for National Statistics showed the UK economy expanded for the third straight month in July as lockdown measures continued to ease. GDP expanded 6.6% in July from June, when it gained 8.7%, the data said. Economists expected GDP to climb 6.7%. In three months to July, GDP fell 7.6% from the previous three months.

Likewise, industrial output rose 5.2%, slower than the 9.3% increase seen in the previous month. Manufacturing output advanced 6.3%.

The Japanese currency was flat at 106.13 a little while ago, after having firmed up to 106.06 from a low of 106.26 touched in the Asian session. Producer prices in Japan were up 0.2% on month in August, the Bank of Japan said. That was in line with forecasts and down from 0.8% in July.

On a yearly basis, producer prices fell 0.5% – again matching expectations following the 0.9% decline in the previous month.

The Aussie was firmed by more than 0.3% with a unit of the currency fetching US$0.7283. The dollar had earlier weakened to 0.7306.

Against the Swiss franc, the dollar was trailing its previous close by about 0.2% with a unit of greenback fetching CHF 0.9088, compared to CHF 0.9106 on Thursday.

The Loonie was marginally up against the dollar at 1.3183, after easing to 1.3208 from 1.3151.

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