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US released CPI data within economists’ expectations, cooling down the fear over accelerated inflation and bringing down USD to one-week low; GBP continues to perform as Britain expected to recover soon

BLOG March 11, 2021 at 07:03 am (GMT)

• USD at one-week low after soft CPI data
• GBPNZD reaches near 4-month best but Kiwi remains strong as well

USD languished near one-week low on Thursday after the latest US CPI data released and Treasury yields declined. February’s CPI increased solidly to 0.4% from a previous release of 0.3%, as the cost of gasoline rose further. The fiture stays within the economists’ expectations. In the 12 months through February, CPI gained 1.7%, but higher inflation is expected in the coming months. Gas prices have climbed 6.4% in February, accounting for over half of the rise in CPI; food climbed 0.2%, and food consumed outside home climbed 0.1%. The softer-than-expected CPI data somewhat cooled down some inflation expectations, undermining gains in the longer-term Treasury bills. Gold has caught the chance to climb to $1,734.28 at press time, a 0.43% from opening. Crude oil prices also aimed higher over the past 24 hours.
Outside the US, GBP remains one of the most appealing major currencies of the year so far. This week, it continues to rally amid expectations that the UK will be the first major western economies to recover from the pandemic. GBPNZD opened the week at 1.9308 and touched a high of 1.9452 – the best level for the pair since November 2020. Part of NZD’s weakness is due to the surging demand on USD since last week as the yields climbed, but NZD still remains a strong performing growth-linked currency nevertheless. RBNZ has announced today that it would remove some of the temporary liquidity facilities it had implemented during the pandemic, giving NZD a reassurance as the local economy recovers. Today in the session, we will also see the release on New Zealand’s February food inflation report, and on Friday we will have the business PMI data. Stronger than expected figures could help NZD take back some gains against GBP.