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Dollar Falls After US Inflation Data
The dollar weakened against most major currencies on Thursday, December 18, after data showed a lower-than-expected rise in US inflation, while the pound sterling rose following the Bank of England's decision to cut interest rates, according to Reuters.
Data from the US Labor Department showed that the Consumer Price Index rose 2.7% year-on-year in November, compared to expectations of 3.1% in a Reuters poll of economists.
The dollar fell 0.12% to 155.48 yen and declined 0.16% to 0.794 Swiss francs.
The collection of data needed for the inflation report was affected by the longest government shutdown in US history. The Federal Reserve uses the Personal Consumption Expenditures Price Index as a benchmark for its 2% inflation target.
US President Donald Trump said on Wednesday that the next Federal Reserve chair would be someone who believes in the need to cut interest rates "significantly."
All the leading candidates for the position—including White House economic adviser Kevin Hassett, former Federal Reserve member Kevin Warsh, and current member Chris Waller—are calling for interest rates to be lowered from their current levels.
The euro was steady in volatile trading after the European Central Bank decided to keep interest rates unchanged, adopting a more optimistic outlook on the eurozone economy, which has shown resilience to global trade shocks.
The euro fell 0.01% to $1.173.
The dollar index, which measures the performance of the US currency against a basket of currencies including the yen and the euro, also declined by 0.04% to 98.329.
The British pound rose after the Bank of England cut interest rates for the fourth time this year, while markets pushed back their expectations for the next rate cut to June instead of April as previously anticipated. Sterling climbed 0.29% to $1.3414.
The Swedish and Norwegian central banks kept their key interest rates unchanged, in line with expectations. The Swedish krona traded at 10.9074 against the euro, while the Norwegian krone fell 0.33% to 11.9313 against the euro.
The Bank of Japan appears poised to raise its short-term interest rate on Friday from 0.5% to 0.75%, as rising food costs continue to keep inflation above its 2% target.
