The Yen eased broadly on Wednesday as a slow increase in US Consumer Inflation report for April boosted stocks and raised investor appetite for risk. This fade CPI briefly caused traders to sell the Dollar, but analysts said it did not changed market views that the Federal Reserve's cycle of interest rate cuts was almost over.
UsdJpy jumped to a session high of 105.44, with Wall Street stocks surging as inflation worries eased. It last traded at 105.17 up 0.39%. EurJpy gained 0.37% to 162.66 while the CadJpy rose 0.34% to 104.68 after posting 105.58 intraday high. EurUsd was flat at 1.5467 after posting intraday 1.5396 low.
US CPI rose by 0.2% in April, slightly less than the 0.3% forecast by market analysts. CPI rose 0.3% in March.
Speculation the Fed is done with cutting borrowing costs, having slashed its key lending rate by 325bp to 2% since mid-September, has supported the Dollar and analysts said this view had not changed. US interest rate futures showed the Fed would raise the benchmark federal funds rate by a 25bp by year-end to 2.25%. They also priced in a 92% chance that the central bank would leave rates unchanged next month.
Sterling drop to a near three-month low against the Dollar after the Bank of England, in its quarterly inflation report, said British prices would shoot up this year, which many believe may delay interest rate cuts. If British inflation continues to heat up, this will have a negative impact on the broader economy while keeping the central bank wary of cutting rates, which often promotes growth. GbpUsd last traded up 0.08% at 1.9964.