Dollar declines on moderate inflation

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The dollar declined against rival currencies on Monday after data showed that U.S. consumer spending rose slightly in February, but inflation eased.

The U.S. dollar index edged lower by 0.08% to 96.09, dropping from earlier of highs of 96.42.

Trading was thin on Monday due to the Easter holiday.

Personal spending rose 0.1% last month, in line with economists’ expectations.

Personal income grew by a seasonally adjusted 0.2%, surpassing earlier expectations a 0.1% increase.

Inflation, as measured by the PCE index, dipped 0.1% in the previous month, due to lower energy costs.

The PCE index inched higher by 1% year-on-year, down from 1.2% in January.

Meanwhile, investors are hotly anticipating Janet Yellen’s speech on Tuesday for new hints on the path of interest rates. Yellen is the chairperson of the Federal Reserve.

Dollar investors are hoping for more rate hikes as higher interest rates make the dollar more attractive to investors looking for yields.

The dollar has gone up in recent sessions after hawkish comments by Fed officials bolstered expectations of more rate hikes by the American central bank.

EUR/USD rose 0.17% to trade higher at 1.1184, while USD/JPY closed at 113.36, settling below the session’s highs of 113.69.

The pound extended gains, with GBP/USD adding 0.69% to trade higher at 1.4222, while USD/CHF was lower 0.3% at 0.9751.

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