He global dollar was still adrift this Friday after it became known that the inflation annualized in USA continued to decline while the labor market remained fairly healthy over the past month.
He dollar indexwhich measures the greenback against a basket of six currencies, was trading at 100.49, not far from Wednesday’s 14-month low of 100.21, Reuters reported.
He Department of Commerce American published this morning the consumer price index (PCE), the favorite indicator of the Federal Reserve (Fed), which fell to 2.2% year-on-year in August, compared to 2.5% in July. However, the core inflationwhich excludes the most volatile prices such as food and energy, rose to 2.7% in the 12-month measurement, compared to 2.6% in July.
Analysts do not expect this data to materially change market prices for US rates any lower. Traders are pricing in a 74 basis point cut for the rest of the year, with a 51% chance of another aggressive 50 bp cut, according to the tool FedWatch from CME Group.
Meanwhile, the yen regained strength on Friday after Japan’s former defense minister, Shigeru Ishibawill win the race for leadership of the ruling Liberal Democratic Partyheading to become its next prime minister.
Ishiba is critical of past monetary stimulus and told Reuters the central bank was “on the right track” with rate hikes so far.
The yen gained about 1% to 143.33 yen per dollar, from 146.49 earlier in the day, its weakest level since Sept. 3.
On the other hand, the euro fell 0.13% to $1.1163 after data showed inflation in France and Spain rose less than expected, prompting traders to raise their bets on an October rate cut by the European Central Bank (ECB).
“The gap between Fed and ECB rate cut expectations has narrowed, and this will likely keep EUR/USD stuck between 1.11 and 1.12 ahead of the release of the US jobs report.” , noted the analysts of UniCredit.
Meanwhile, the series of China stimulus measures This week continued to drive risk appetite, lifting stocks, commodities and risk-sensitive currencies.
The pound sterling fell slightly to $1.33955, but remained near this week’s two-and-a-half-year high, while Australian and New Zealand dollars They also remained near multi-year highs due to Chinese stimulus plans.
Source: Ambito
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