The pound traded lower against the dollar early in Asia with the market waiting for PMI data for the manufacturing sector of major euro-zone economies and inflation data from the UK. Fed comments about a possible mid-year US rate hike failed to boost the greenback to any significant level as the same policymaker also lowered his growth forecast for the world’s largest economy in his remarks late yesterday. The UK’s core consumer price index is forecast to have risen to 1.3% from February, slower than the 1.4% growth shown in January. The headline index may also have dropped to 0.1% from 0.3%, as per forecasts. This and data such as PPI and RPI indices for the UK will all be out at 9:30 GMT.
The euro fell against the dollar and the yen in early morning trade, with some traders adjusting positions after the currency staged a rally overnight. The single currency extended its recent rebound overnight after the Federal Reserve’s policy statement indicated it intends to proceed cautiously on interest-rate rises, much less aggressive than many had expected. Over the near term, the euro may get a boost from short covering triggered by possible strength in euro-zone PMI data later today.
The dollar edged higher versus a basket of currencies on Tuesday after a top US Federal Reserve official said it should wait no more than a few months before considering an interest rate hike. Market participants also attributed the dollar’s bounce to technical factors and said the greenback may face further long liquidation after the Fed signalled last week that it is in no rush to tighten monetary policy. Traders said the greenback gained a boost after San Francisco Fed chief John Williams reiterated that the Fed should seriously discuss raising rates by mid-year.