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Dollar Subdued As U.S. Inflation Slows

dollar 080219 12jan23 lt

The U.S. dollar was lower against its major counterparts in the New York session on Thursday, after a data showed that the nation's consumer prices decreased modestly in December, bolstering hopes for a slowdown in rate hikes from the Federal Reserve.

Data from the Labor Department showed that the consumer price index edged down by 0.1 percent in December after inching up by 0.1 percent in November. Economists had expected consumer prices to come in unchanged.

The report also showed the annual rate of consumer price growth slowed to 6.5 percent in December from 7.1 percent in November, in line with expectations. The annual growth was the slowest since October 2021.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in December following a 0.2 percent uptick in November. The increase matched economist estimates.

The annual rate of core price growth slowed to 5.7 percent in December from 6.0 percent in November. The year-over-year growth was also in line with expectations.

A separate report showed that first-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended January 7.

The report said initial jobless claims slipped to 205,000, a decrease of 1,000 from the previous week's revised level of 206,000.

The dip surprised economists, who had expected jobless claims to rise to 215,000 from the 204,000 originally reported for the previous week.

With the modest decrease, initial jobless claims fell to their lowest level since hitting 190,000 in the week ended September 24th.

The USD/JPY pair fell to a 9-day low of 129.50. The pair had closed Wednesday's deals at 132.47. The greenback may challenge support around the 118.00 level.

Data from the Bank of Japan showed that overall bank lending in Japan was up 2.7 percent on year in December - coming in at 596.525 trillion yen.

That was in line with expectations and unchanged from the November reading.

The USD/CHF pair dropped to 0.9266, from a 6-day high of 0.9361 seen at 8:30 am ET. At yesterday's trading close, the pair was quoted at 0.9308. The greenback is seen finding support around the 118.00 mark.

The greenback touched 1.0838 against the euro, its lowest level in nearly nine months. The pair was worth 1.0757 when it closed deals on Wednesday. Further fall in the greenback may find support around the 1.10 mark.

The greenback weakened to more than a 3-week low of 1.2238 against the pound, reversing from a 3-day high of 1.2084 it logged at 8:30 am ET. The pound-greenback pair had ended yesterday's trading session at 1.2145. The greenback may face support around the 1.24 region, if it falls again.

The greenback depreciated to a 1-1/2-month low of 1.3347 against the loonie, after rising to a 6-day high of 1.3458 at 8:30 am ET. The greenback was trading at 1.3423 against the loonie at yesterday's close. The greenback is likely to challenge support around the 1.30 mark.

The greenback dipped to near a 5-month low of 0.6984 against the aussie, from a 2-day high of 0.6870 hit at 8:30 am ET. The greenback was worth 0.6905 per aussie at Wednesday's New York session close. Next key support for the greenback is possibly seen around the 0.71 level.

Data from the Australian Bureau of Statistics showed that Australia posted a seasonally adjusted merchandise trade surplus of A$13.201 billion in November.

That beat expectations for a surplus of A$10.5 billion following the A$12.217 billion surplus in October.

The greenback slipped to a 4-week low of 0.6417 against the kiwi, down from a 6-day high of 0.6304 seen at 8:30 am ET. At Wednesday's close, the pair was valued at 0.6365. Should the greenback falls further, it is likely to test support around the 0.66 level.

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