The dollar index (DXY00) Wednesday rose by +0.15%. The dollar on Wednesday finished moderately higher due to concern that the escalation of the trade war would boost inflation and keep Fed policy restrictive after US tariffs on steel and aluminum went into effect, and the EU and Canada retaliated by imposing tariffs on some US goods. Gains in the dollar were limited after US Feb CPI rose less than expected, a dovish factor for Fed policy. Also, the strength in stocks Wednesday reduced liquidity demand for the dollar.
US Feb CPI rose +0.2% m/m and +2.8% y/y, weaker than expectations of +0.3% /m and +2.9% y/y. Feb CPI ex-food and energy rose +0.2% m/m and +3.1% y/y, weaker than expectations of +0.3% m/m and +3.2% y/y, with the +3.1% y/y gain the smallest year-on-year increase in 3-3/4 years.
