2024-01-12 10:52:00
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Investing.com – The US dollar was steady in early European trade on Friday, as investors digested mixed US consumer inflation data and the potential impact on future Federal Reserve interest rate cuts.
At 13:50 Riyadh time, the US currency, which tracks the US currency against a basket of six other currencies, was trading flat at 102.37, down from Thursday’s high of 102.76 but well ahead of its five-month low of 100.61. He arrived in December.
The dollar declines after the release of the consumer price index
Data released on Thursday showed the US index rose 0.3% in December, rising 3.4%, beating expectations for a rise of 0.2% and 3.2%, respectively.
However, the dollar received little support from this, as the “core” CPI, which excludes volatile food and energy prices, fell again, suggesting that core inflation is still on the decline.
Fed officials have tried to play down the possibility of early rate cuts, with the head of the Cleveland Fed saying Thursday that the latest CPI numbers mean it is likely too early for the central bank to cut rates in March.
However, the majority of traders still expect the Fed to start cutting interest rates in March.
“The March rate cut of more than 60% remains in play, and we continue to see short-term vulnerability to risk assets from tight repricing,” analysts at ING said in a note.
While attention now turns to the US producer price release later in the session, with a 0.1% m/m rise expected in December, a rise of just 1.3%.
Sterling gains on UK GDP growth
In Europe, it rose 0.1% to 1.2775 after data released earlier on Friday showed the British economy growing slightly stronger than expected in November, with the country’s… It rose by 0.3% on a monthly basis, exceeding expectations for growth of 0.2%.
Production also expanded in November, after sharp declines in the previous month, raising hope for the country’s economy, one of the weakest in Europe.
It rose 0.1% to 1.0975, with inflation data confirmed at 3.7% and 3.1% respectively on an annual basis.
ING analysts said: “The EUR/USD pair was rejected at the key resistance level of 1.1000, and we now expect some additional days of range trading, with some modest downside risks.”
The yuan benefits from Chinese data
On the other hand, {USD} fell by 0.1% to 7.1622, after Chinese inflation and trade data indicated some signs of recovery in Asia’s largest economy in December. It also rose slightly on a monthly basis, while it rose more than expected.
While Tadawul fell by 0.2% to 145.02 after recovering sharply against the dollar on Thursday. Markets still expect the Bank of Japan to reiterate its extremely cautious stance later this month.
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