US Open Note – Dollar moves south after soft CPI; euro rises above 1.21 


Raffi Boyadjian, XM Investment Research Desk

Dollar eases after US CPI; US stocks still up

The selling interest in the US dollar is continuing, with its index against a basket of currencies flirting with the fourth consecutive red day after the release of the US CPI data. The annual inflation rate remained unchanged at 1.4% for January, the same as in December and marginally below expectations of 1.5%. Month-on-month, consumer prices went up 0.3%, in line with forecasts from 0.2% before.

Powell and other policymakers at the Fed have suggested that any acceleration in inflation will be seen as transitory. The Fed is expected to update its outlook at the March 17 meeting, while Fed Chair Powell speaks later today (19:00 GMT). Dollar/yen had a strong decline at the time of the release but is still trading around its opening level so far. However, US stock futures are rallying, posting new peaks again.

The major theme these days is that the Democrats will push their relief package through Congress without Republican support.

Euro and gold moves north

ECB President Lagarde clarified today that it will take a while before the ECB must worry about inflation and that they must continue with accommodative monetary policy.

The euro is trading above $1.21 today after the rebound on the 200-day simple moving average (SMA), while pound/dollar recorded a new 33-month high at $1.3855. Gold prices are posting the fourth positive day in a row, reaching the 100-day SMA around 1,850. Moreover, oil prices are flat after a rally to new highs near 58.74