U.S. dollar rises to 13 - year high as inflation drops

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The U.S. dollar rises to a 13 -- year high of 5% y Seen as transitory due to one-off pressures, dollar slips The market thought the Fed analyst Graphic: World FX Rates https: tmsnrt.rs 2 RBWI 5 E by Tom Westbrook SINGAPORE, June 11 - After a week of anxious waiting markets got the high US inflation number they shrugged off and moved on - leaving the dollar under pressure and most major Early in the Asia session the US dollar enjoyed small losses as traders figured there were enough one-offs in the recent 0.6% rise in consumer prices to support the Federal Reserve's insistence that inflation was likely to be transitory. The dollar was set at 109.37 yen and the currency was bought for a small weekly loss. It was also on track for modest losses on the Aussie dollar and British pound, last traded at $0.7748 per Aussie and $1.4171 per pound. Adovish commitment from the European Central Bank to stick with its raised tempo of bond purchasing held the euro in check at $1.2175. What we’re seeing is a market that believes in the Fed, said Chris Weston, Head of Research at the broker Pepperstone in Melbourne as investors temper fears that the early recovery in the United States has increased the rate of interest. We're going to get tapering, he said. But it's going to get done a snail's pace. The overnight data showed US consumer prices up 5% year-on-year, the sharpest rise in more than a dozen years and core inflation spiked at 0.7% a month. But hefty contributions from short-term rises in airline ticket prices and used cars helped traders decide that their future prospects were not going to drive interest rates any time soon. It basically takes the Fed script that we would see a burst but it's going to be temporary, says Westpac Currency Analyst Imre Speizer. This report doesn't argue against it, but does not conform to it. I think the market needed something that argued against it to push the U.S. dollar higher. The U.S. dollar index was slightly flat after inflation figures were released and has sat for the week at 90.041, more or less flat for the week. Benchmarks 10-year Treasury yields actually won a three-month high in the wake of the CPI, as leading short sellers capitulated and placed bets on rising yields. Focus now turns to the Fed meeting next week, although traders now say that there may not be much of a shift in rhetoric that played down the need to loosen stimulus. A plan to reduce bond buying should be announced in August or September, a Reuters poll of economists found, but it is not projected to begin until next year. Before the onshore trading band demonetization, China's yuan for offshore was steady at 6.3853 per dollar. The South Korean won traded heavily after the governor of central bank hinted at normalising policy in an advance copy of a speech to be delivered later on Friday. Cryptocurrencies looked to close the week steady with bitcoin seemingly well supporting $35,000 despite more talk of global regulatory scrutiny. Current currency bid prices at 113 GMT Description U.S. Dollar Moldpct Change YTD ETS Low Bid - 0.03% 1.2180 1.2171 Dollar Yen 109.3150 0.8946 - 0.03% 0.36% 1.4178 $0.4170 Currency Chinese 1.2088 1.2095 - 0.04% 0.87% 0.7199 $0.7188 Dollar All places Tokyo Forex market information from BOJ Reporting by Tom Westbrook Editing by Shri Navaratnam by Shri Vivekovich M. V.

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