FOREX-Fed talk subdues dollar as inflation remains focus Reuters 5/12/2021
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By Ritvik Carvalho
LONDON, May 12 (Reuters) - The U.S. dollar hovered above a 2-1/2-month low versus major peers on Wednesday, as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual U.S. inflation.
Analysts forecast figures due at 1230 GMT to show a 3.6% lift in year-on-year prices, boosted by last April s low base. The month-on-month forecast is for a modest 0.2% rise.
Fed talk keeps dollar tied as focus remains on inflation
The U.S. dollar hovered above a 2-1/2-month low versus major peers on Wednesday, as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual U.S. inflation.
Analysts forecast figures due at 1230 GMT to show a 3.6% lift in year-on-year prices, boosted by last April’s low base. The month-on-month forecast is for a modest 0.2% rise.
“We further expect that the release would highlight that, in addition to base effects in commodity prices, the U.S. inflation spike is driven by factors with greater staying power that could result in a more persistent inflation overshoot than expected by the Fed at present,” said Valentin Marinov, head of G10 FX research at Credit Agricole.
In an interview on CNBC s Closing Bell, the central bank official said fiscal and monetary policy help as well as aggressive vaccination efforts have helped keep growth going since the Covid-19 pandemic began in March 2020.
But he added that even with rising inflation ahead, the Fed should stay accommodative in its policy stance until there are clearer signs that the virus no longer poses as major a threat. That includes keeping short-term borrowing rates anchored near zero and continuing to buy at least $120 billion a month even as markets wonder when the Fed will start pulling back on those purchases.
In an interview on CNBC s Closing Bell, the central bank official said fiscal and monetary policy help as well as aggressive vaccination efforts have helped keep growth going since the Covid-19 pandemic began in March 2020.
But he added that even with rising inflation ahead, the Fed should stay accommodative in its policy stance until there are clearer signs that the virus no longer poses as major a threat. That includes keeping short-term borrowing rates anchored near zero and continuing to buy at least $120 billion a month even as markets wonder when the Fed will start pulling back on those purchases.
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Market Moving Headline:
St. Louis Federal Reserve President James Bullard acknowledged the progress the economy has made but said Tuesday it’s still not time to ease back the throttle on policy.
In an interview on CNBC’s “Closing Bell,” the central bank official said fiscal and monetary policy help as well as aggressive vaccination efforts have helped keep growth going since the Covid-19 pandemic began in March 2020.
But he added that even with rising inflation ahead, the Fed should stay accommodative in its policy stance until there are clearer signs that the virus no longer poses as major a threat. That includes keeping short-term borrowing rates anchored near zero and continuing to buy at least $120 billion a month even as markets wonder when the Fed will start pulling back on those purchases.