By Chuck Mikolajczak
NEW YORK (Reuters) – The dollar fell on Wednesday, following a report that showed inflation is unlikely to cause the Federal Reserve to adjust its aggressive monetary policy path.
* The Consumer Price Index (CPI) rose 0.3% in April, its smallest advance since August, the Labor Department reported, compared with a 1.2% mom increase in March, the biggest advance since September 2005 .
* In annual terms, the CPI rose 8.3%, above the estimate of 8.1% but below the 8.5% of the previous month.
* The data suggested inflation may have peaked but was unlikely to cool off quickly and derail current Federal Reserve plans to tighten monetary policy.
* The dollar index, which hit a four-session low of 103.37 before the report, immediately strengthened to a one-session high of 104.13 after the data, just below a two-decade high of 104.19 hit Monday.
* «A stronger-than-expected strength, especially in the core measure, suggests underlying inflation pressures remain quite strong and persistent,» said Karl Schamotta of Cambridge Global Payments in Toronto.
* “The dollar is blowing away everything else and risk appetite is being demolished, we have seen a sharp sell off in stock indices, sensitive or commodity linked currencies are also selling off and that flight into the dollar continues «, he added.
* Still, the dollar index was volatile and slipped off its highs, shedding 0.029% to 103.89, while the euro fell 0.07% to $1.052.
* The greenback has risen more than 8% this year as investors have hunkered down for its safety amid concerns about the Fed’s ability to curb inflation without triggering a recession, coupled with concerns about the slowdown of the growth derived from the war in Ukraine and the increase in cases of COVID-19 in China.
* The yen was up 0.48% at 129.79 per dollar, while sterling was last trading at $1.2258, down 0.28% on the day.
(Edited in Spanish by Ricardo Figueroa and Carlos Serrano)