EURUSD turned back up after the release of U.S. inflation data, which showed core consumer prices rose less than expected by 0.1 percent instead of 0.2 percent. Shortly after, U.S. industrial production data also disappointed by coming in flat in February, despite a 0.4 percent growth forecast. The dollar gave up gains made earlier in the European trading session. EURUSD had touched a low of 1.3048, then shot up to 1.3133.
Lower inflation reduces the chances the Federal Reserve might start tightening monetary policy and removes one of the factors that could drive Treasury yields higher. The recently higher bond yields have been a key driver of dollar strength. Higher yields can boost a currency as investors shift into that currency for bigger returns.
USDJPY opened in Europe at 83.55 edged up to a high of 83.93 before easing down to 83.51 after the CPI data from the U.S.
GBPUSD also jumped after the U.S. data to as high as 1.5814 from the pre-data level of 1.5729. This helped the British pound recover from weakness following an announcement by Fitch this week that it had placed the UK’s triple-A sovereign rating on negative watch .
The Canadian dollar was underperforming most of the European session, presumably ahead of Canadian Manufacturing Sales report that was expected to show a slower growth in sales numbers for a second month in January. In fact the numbers were worse than expected. However, with the U.S. CPI data coinciding, this took more weight in the direction of the greenback, which fell across the board. This led USD to fall against the loonie, with USDCAD falling to 0.9900 from a session high of 0.9939.
The ICE Dollar Index, which measures the dollar against a basket of currencies, fell 0.3 percent from Thursday, down to 79.99.
Crude oil prices rose after the US data to $105.88 from $105.12.