The US Dollar has weakened against the Canadian Dollar after the USA’s latest Consumer Price Index fell more than economists had been expecting, the currency also posted losses against several of its major peers on the back of weaker than expected Industrial Production data.
According to the US labour department’s Consumer Price Index the cost of living declined in March for the first time in four months as inflation was kept in check by cheaper fuel and clothing prices.
The CPI fell by 0.2% in March after rising to 0.7% in February. Economists had been expecting no change. The decline is expected to provide the Federal Reserve with scope to maintain its monetary stimulus programme as it attempts to speed up economic growth in the world’s largest economy.
Stripping out volatile energy and food, consumer prices rose only 0.1% after advancing 0.2% in the previous month. That took the increase over the 12 months to March to 1.9%. The core CPI increased 2% in February.
Data ranging from retail sales to employment and manufacturing all suggest that economic growth in the country faltered at the end of the first quarter of 2013 means that the Fed is now highly unlikely to scale back its asset purchasing programme an act that will weaken the Dollar further. The economy was also weighed down on Tuesday by a 3.9% fall in future construction payments.
Further pressure is due to fall upon the US Dollar after the International Monetary Fund lowered the nation’s growth forecast to 1.9%, down 0.2% from its previous prediction in January.
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