Hot PCE Inflation Data Lifts U.S. Dollar

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The U.S. dollar spiked up against its major counterparts in the New York session on Friday, as U.S. core personal consumption expenditures price index, the Federal Reserve's preferred gauge of inflation, rose more than expected in January, cementing hopes that the Federal Reserve would keep raising interest rates to tame it.

Data from the Commerce Department showed that core PCE inflation accelerated to 4.7 percent in January from an upwardly revised 4.6 percent in December on an annual basis.

Economists had expected the annual rate of growth by core consumer prices to slow to 4.3 percent from the 4.4 percent originally reported for the previous month.

Personal income climbed by 0.6 percent in January after rising by an upwardly revised 0.3 percent in December.

Economists had expected personal income to advance by 0.9 percent compared to the 0.2 percent uptick originally reported for the previous month.

Personal spending surged by 1.8 percent in January after edging down by a revised 0.1 percent in December.

Personal spending was expected to jump by 1.3 percent compared to the 0.2 percent dip originally reported for the previous month.

Separate data showed that U.S. new home sales increased to a ten-month high in January.

The report said new home sales spiked by 7.2 percent to an annual rate of 670,000 in January after soaring by 7.2 percent to a revised rate of 625,000 in December.

Economists had expected new home sales to rise to an annual rate of 620,000 from the 616,000 originally reported for the previous month.

The USD/CHF pair climbed to a 1-1/2-month high of 0.9388. At Thursday's close, the pair was valued at 0.9339. The greenback is likely to face resistance around the 0.96 region, if it gains again.

The USD/JPY pair advanced to more than a 2-month high of 136.38, from a 4-day low of 134.05 hit at 7:45 pm ET. The pair was worth 134.68 when it ended deals on Thursday. The greenback is seen finding resistance around the 139.00 mark.

Data from the Ministry of Internal Affairs and Communications showed that Japan's consumer price inflation accelerated further in January to hit a fresh 41-year high, adding pressure on the central bank to withdraw its massive monetary stimulus.

Core inflation that excludes volatile fresh food climbed to 4.2 percent in January from 4.0 percent in the previous month

The greenback was up against the euro, at a 1-1/2-month high of 1.0536. The pair had closed Thursday's deals at 1.0595. Continuation of the greenback's uptrend may lead it to a resistance around the 1.03 region.

The greenback touched a 1-week high of 1.1927 against the pound. The pound-greenback pair had finished yesterday's trading session at 1.2010. Should the greenback strengthens further, it is likely to test resistance around the 1.18 region.

The greenback firmed to 1-1/2-month highs of 0.6722 against the aussie and 1.3654 against the loonie, from yesterday's closing values of 0.6806 and 1.3547, respectively. The greenback may test resistance around 0.66 against the aussie and 1.38 against the loonie.

The greenback approached 0.6151 against the kiwi, its strongest level since November 23. At yesterday's trading close, the pair was quoted at 0.6227. Next near term resistance for the greenback is likely seen around the 0.60 level.

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