Dollar Drops on Price Data Miss; Pound Hit by BOE. The dollar gave up some recent gains on Thursday, extending a decline as data showed U.S. consumer prices rose by less than forecast in April. Stock markets were mixed as traders confronted a range of catalysts from political risks to missiles in the Middle East, while the pound erased an advance after the Bank of England held interest rates.
Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dropped back below 3 percent to push the dollar toward its first retreat in five days. Data showed costs for automobiles and airfares declined, reducing chances that inflation will run significantly above the Federal Reserve’s target in coming months. U.S. equity futures climbed.
Elsewhere, the pound weakened as policymakers at the central bank voted 7-2 to keep rates unchanged in what was interpreted as a more dovish holdthan expected, before paring as the dollar deepened its declines. The Stoxx Europe 600 Index drifted downward as various markets — including in Switzerland, Sweden, and Austria — shut for public holidays. Oil extended its rally in New York.
The inflation miss adds to an unrelenting news flow for investors this week, with tension between Israel and Iran mounting just days after U.S. President Donald Trump roiled the international community with his decision to ditch a nuclear accord with the Islamic Republic. Meanwhile, the stage is setfor a populist government to form in Italy, and traders are rapidly coming to terms with an election upset in Malaysia.
Malaysian markets are closed, though trading in non-deliverable forwards suggested the ringgit will tumble Monday in the wake of the surprise ouster of the country’s ruling party. The 2045-maturity dollar bond also declined.
Developing markets more broadly signaled stability, and the MSCI Emerging Market Index rallied for a fourth day. The New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained.
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