The euro and sterling have recorded gains against the dollar as both were able to receive an unexpected boost from the inflation in the United States of America.
The strong gains that were recorded on Thursday for the euro and the pound have knocked the US dollar to its lowest level in a month and a half. It comes amid a series of economic news from both sides of the Atlantic.
The dollar sank against the euro and pound after the “disappointing” inflation reading. It means that sterling rose to 1.31 against the US dollar. It is considered its highest level since late July, while the euro was able to reach 1.17.
In August, the inflation in the United States stubbornly remained at 0.2 percent against the forecasts of analysts that amounted to 0.3 percent. Connor Xampbell, an analyst at Spreadex said that it might cast a “smidge of doubt” over a rate rise in September from the Federal Reserve.
He stated: “Though it likely won’t dissuade Jerome Powell and his Federal Open Market Committee pals from raising rates in a fortnight, continued softness may well impact its long-term guidance.”
The Bureau of Labor Statistics revealed that the consumer price index of the United States rose by 2.7 percent for the 12 months through last month. It is down from the 2.9 per cent in 12 months to July as the higher costs of fuel and rent were offset by the cheaper prices of healthcare and clothing.
At the same time, figures that were published today revealed that the number of Americans who are filing for unemployment dropped to a 49-week low.
The chief market analyst at IG, Chris Beauchamp, stated: “We are at a so-called Goldilocks moment once more, as wages rise but inflation stays muted. Thus, we get the benefit of higher consumer spending without the Fed clucking around the economy like a concerned mother hen.”