Investing.com – The dollar dropped against a basket of major currencies, after data showed that inflation remained subdued ahead of the Federal Reserve two-day monetary policy meeting scheduled for Tuesday.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.28% to 94.44.
Fresh on the heels of the publication of his best weekly gain of 2017, the dollar came under pressure, as investors pondered about a duo of reports of stuttering with inflation, while consumer spending notched its biggest monthly increase since August 2009.
To measure the Federal Reserve’s preferred inflation, the personal consumption expenditure (PCE) price index excluding food and energy, rose by 1.3% in the 12 months to September.
This was in line with expectations, but significantly below the Fed’s 2% target, fuelling expectations that the trend to subdued inflation will keep interest rates lower for longer.
Consumer spending, which accounts for more than two-thirds of the US economy, rose by 1% last month, the Commerce Department said on Monday.
To replace the duo of the reports comes amid ongoing speculation about President Donald — Trump-election of the candidate ends Janet Yellen as head of the US Central Bank.
President Donald Trump is likely to replace pick-and-Central-Bank-Governor Jerome Powell, current Fed chair Janet Yellen, Reuters reported on Monday, citing a source familiar with the matter.
Trump is expected to announce his choice on Thursday in front of his five-nation trip to the Asia-Pacific region-looking region than the United States to curb North Korea’s growing nuclear threat.
The fall in the dollar, however, is not expected to continue, as data showed that the dealer give up some of their bearish bets on the greenback.
The value of the dollar’s net short position was Oct $8.02 billion in the week ended. 24, down from net shorts of $12.65 billion last week, according to data from the Commodity Futures Trading Commission data released on Friday.
The pound and the euro the main beneficiary of the crisis in the dollar, as both currencies hit session highs.
EUR/USD fell to the rose 0.26% to $1.1638, up 0.26%, while EUR/GBP fell 0.27% to £0.8811.
GBP/USD added 0.59% to $1.3209, as investors anticipated an imminent Bank of England interest rate increase will be for the first time in more than a decade on Thursday.
USD/CAD rose 0.12% to C$1.2825, while USD/JPY 0.49% fell to Y113.13.