The dollar has maintained a solid tone over the past 24 hours without making any strong progress. There were no major surprises in the Australian Reserve Bank minutes with policy on hold. There was a much weaker than expected figure for Chinese money supply growth which put China growth concerns back in the forefront of market concerns and AUD/USD retreated back below the 0.9400 level as global growth doubts also persisted.
The headline UK consumer inflation data was in line with consensus expectations with a further slight decline in the annual rate to 1.6% from 1.7% previously which was a fresh four-year low for the benchmark rate. GBP/USD briefly spiked lower to the 1.6670 area before recovering equally rapidly. There had been some chatter of a figure at 1.5% into the release and failure to match these rumours triggered an aggressive round of short covering. The latest house-price inflation reading was also stronger than expected with an annual increase of 9.1% as London prices rose by over 17% for the year.
Market reaction to the German ZEW release was limited with a lower than expected headline release and fourth consecutive decline offset by a stronger than expected figure for current conditions. EUR/USD reaction was limited and the pair was trapped in narrow ranges around 1.38 during the European session.
US consumer prices data was slightly stronger than expected with the headline and core increases both at 0.2% for the month compared with an expected 0.1% and a 1.5% annual increase. The data should ease Fed concerns that inflation is too low and provide some overall dollar support. The US currency did rally following the data without being able to break any significant technical levels.
Growth-related data was slightly weaker than expected both for the New York Empire index and NAHB housing index which tended to block the US currency. EUR/USD found support on approach to 1.3780 and rallied back to the 1.3825 area while USD/JPY was blocked around 102.0.
Risk conditions deteriorated slightly during the US session with fresh concerns surrounding the situation in Ukraine. There was fresh buying support for bonds which tended to sap underlying US demand as German bond yields dipped to 11-month lows. USD/JPY retreated to the 101.60 area as equity markets came under pressure.
Commodity currencies were generally weaker as AUD/USD dipped to 0.9350 and USD/CAD briefly broke above the 1.10 level.