Major currencies extended gains on Thursday, June 13, against the dollar, which was hurt by weaker-than-expected U.S. inflation data, with the exception of the yen, which fell ahead of a Bank of Japan meeting.
This comes after US Federal Reserve policymakers indicated that interest rates will remain high for some time.
Euro and other currencies performance
The euro advanced 0.6% overnight and broke above its 200-day moving average, last trading at $1.0804. The Australian dollar was at $0.6647, having risen above $0.67 overnight, and the New Zealand dollar jumped to a five-month high above $0.62 before settling at $0.6170.
Post Inflation Report
Currencies gained further following the US inflation report, which showed consumer prices were flat on a monthly basis in May, versus market expectations of a 0.1% rise.
Currencies pared gains after the Fed kept interest rates unchanged in a range of 5.25% to 5.5%, and policymakers' median forecast for the number of rate cuts this year fell to just one, from three in March.
Sterling rose 0.5% overnight to $1.2798, and eased slightly as European markets opened.
Despite the Fed's expectations, markets have remained glued to expectations of about two 25 basis point rate cuts this year.
China and Japan
The Chinese yuan was steady at 7.2660 in offshore trade after making slight gains against the dollar overnight.
The Bank of Japan concludes its two-day policy meeting on Friday and markets are expecting some announcement or signal that the bank will scale back its massive bond purchases to allow Japanese yields to rise further.
That leaves the yen vulnerable to a slide. It was last trading at 157.08 against the dollar. It has fallen against other currencies, hitting a 17-year low of 97.06 against the New Zealand dollar overnight and a 16-year low of 200.91 against the pound.
