Surge In U.S. Core Inflation Buoys Dollar

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The U.S. dollar drifted higher against its major counterparts in the European session on Friday, as U.S. core personal consumption expenditure reading surpassed expectations in April, signaling that inflation is taking hold in the rapidly expanding economy.

Data from the Commerce Department showed that U.S. core personal consumption expenditures index rose 0.7 percent on month in April following a 0.4 percent increase in March.

The PCE price index grew 0.6 percent in April, same as seen in the previous month.

Nonetheless, data showed that personal income fell sharply in April.

Personal income plunged by 13.1 percent in April, after rising by a revised 20.9 percent in March.

Economists had expected personal income to drop by 14.2 percent.

The U.S. budget plan is in focus, with Biden planning to propose $6 trillion in federal spending for the 2022 fiscal year.

Biden will release his first full budget today, which outlines investments in infrastructure, childcare and other public works.

The dollar climbed in the Asian session, as U.S. treasury yields rose before the release of U.S. personal consumption report amid concerns that a higher-than-expected figure could force the U.S. Federal Reserve to tighten its monetary policy.

The greenback added 0.7 percent to hit an 8-day high of 0.9030 against the franc. At Thursday's close, the pair was valued at 0.8966. Further rally may take the greenback to a resistance around the 0.92 area.

Survey data from the KOF economic institute showed that Switzerland's economic outlook remained very positive in May, driven by manufacturing and exports.

The KOF Economic Barometer climbed to a new record high of 143.2 point from 136.4 in April, which was revised from 134.0. Economists had forecast a score of 136.

The greenback touched its highest level since May 17 against the euro, at 1.2133. The pair had closed Thursday's deals at 1.2194. Immediate resistance for the U.S. currency is seen around the 1.20 level.

Data from Destatis showed that Germany's import prices increased at the fastest pace in more than a decade in April.

Import prices grew 10.3 percent year-on-year in April, following a 6.9 percent rise in March. This was the fastest growth since December 2010 and exceeded the economists' forecast of 10 percent.

The greenback gained 0.4 percent against the pound, reaching as high as 1.4136. The pound-greenback pair had finished yesterday's trading session at 1.4199. Further rise in the currency may challenge resistance around the 1.36 region.

The greenback firmed to 110.20 against the yen, its biggest level since April 6, and marked a 0.4 percent rise from yesterday's closing quote of 109.75. Should the greenback continues its uptrend, 111.00 is possibly seen as its next resistance level.

Data from the Ministry of Communications and Internal Affairs showed that Japan jobless rate rose a seasonally adjusted 2.8 percent in April.

That was above expectations for 2.7 percent and was up from 2.6 percent in March.

The greenback was up versus the loonie, at 1.2120. The greenback was trading at 1.2064 per loonie at yesterday's close. Next near term resistance for the greenback is likely seen around the 1.25 level.

Extending its previous session's rally, the greenback appreciated to a 3-day high of 0.7213 against the kiwi. At yesterday's trading close, the pair was quoted at 0.7292. The greenback is likely to find resistance around the 0.71 level, if it rises again.

The greenback was higher at 0.7677 against the aussie, its strongest level since early May. The aussie-greenback pair was worth 0.7744 at Thursday's close. The greenback is seen facing resistance around the 0.75 level.

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