The dollar slumped against major currencies on Wednesday after softer-than-expected U.S. inflation data released on Tuesday eased short-term expectations about tapering of asset purchases from the Federal Reserve.
"The reality is that there is no guidance other than the obvious: poor economic indicators mean the recovery from the pandemic has slowed down more than expected by Delta," said Juan Perez, FX strategist and trader at Tempus Inc in Washington.
Wednesday's data showed Britain's inflation rate hit its highest in almost a decade last month after a record jump that was largely fuelled by a rebound in restaurant prices.The dollar index, a measure of the greenback's value against six major currencies, has traded between 92.3 and 92.9 over the past week as several Fed officials suggested the U.S.
Tapering typically lifts the dollar as it suggests the Fed is one step closer to tighter monetary policy. It also means the central bank will be buying fewer debt assets, in effect reducing the number of dollars in circulation and increasing the currency's value.
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