Investing.com – The dollar remained under pressure against a basket of major currencies despite a slump in the Canadian dollar as traders fretted dovish comments from a Fed official.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.08% to 89.28.
USD/CAD rose 0.83% to C$1.2654 after the Bank of Canada left rates left rates unchanged at 1.25%, as was widely expected.
The monetary policy statement that followed the interest rate decision, however, indicated that the bank would maintain its cautious outlook on future policy changes.
That said, however, some market participants remained confident that the central bank would hike rates in July, to combat inflation, which was said to be nearing the central bank’s target of 2%.
"A July rate hike remains our well-anchored base-case even if the economy is no longer building into excess demand, thereby limiting inflation threats in the second half of the year," TD Securities said.
St. Louis Federal Reserve President James Bullard did little to help sentiment as he warned of the prospect of an inverted yield curve – a key predictor of a recession - within six months.
A sharp 0.47% retreat in GBP/USD to $1.4222 provided additional support for the greenback as an unexpected decline in inflation, led some to question whether the Bank of England will raise rates next month.
EUR/USD rose 0.13% to $1.2386, bouncing off session lows of $1.2341 despite consumer inflation undershooting economists’ forecasts.
USD/JPY rose 0.17% to Y107.19 as risk-on sentiment supported an uptick in the dollar but the upside remained limited amid yen demand on uncertainty over Prime Minister Shinzo Abe's future.