Investing.com – The US dollar ended higher on Monday, rebounding from late last week's sharp losses on signs of cooling inflationary pressures, while the euro slipped after dovish comments from the head of the ECB , Christine Lagarde.
At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.4% higher at 107.750, after fell sharply from Friday's two-year high.
Dollar bounces after sharp pullback
The dollar fell on Monday after a sharp fall on Friday as the Federal Reserve's favorite showed a moderate monthly rise in prices, with a measure of core inflation posting the smallest gain in six months.
That widened some concerns about the possible cut in 2025, which had increased after a hawkish US rate forecast following the last Fed policy meeting of the year.
That said, traders are pricing in 38 basis points of rate cuts next year, shy of the two 25 bp rate cuts expected last week, with the market pushing a ' first discount of 2025 out to June, with a cut in March at a price of around 53%.
Trading volumes are likely to come out as the end of the year approaches, with this trading week shortened by the holiday season.
Eurozone “very close” to ECB inflation target
In Europe, it fell 0.1% to 1.0414, near a two-year low it hit in November, down 5.5% this year, after the President of the European Central Bank said that the region the euro is getting “very close” to reaching the central bank's medium-term inflation target. .
“We are getting very close to that point when we can say that we have brought inflation sustainably to our medium-term 2%,” Lagarde said in an interview published by the Financial Times on Monday.
Earlier in December, Lagarde said the central bank would cut interest rates more if inflation continued to ease towards its 2% target, as there was no longer a need to curb growth. .
It cut its key rate last week for the fourth time this year, and is likely to cut interest rates further in 2025 if inflation concerns subside.
trading broadly flat at 1.2571, after data showed the British economy did not grow in the third quarter, adding to signs of an economic slowdown.
The Office for National Statistics reduced its estimate for the change in output to 0.0% in the July to September period from a previous estimate of 0.1% growth.
The ONS also cut its second quarter growth estimate to 0.4% from 0.5% previously.
Policymakers voted 6-3 to keep interest rates on hold last week, a wider than expected split, amid concerns about a slowing economy.
The Yuan exchange rate has risen against the Yuan
In Asia, it rose 0.2% to 156.72, after rising as high as 158 last week following dovish signals from the .
The BOJ indicated that it was not considering raising interest rates in the short term despite a recent rise in inflation, and that it could raise rates as late as March 2025.
edged 0.2% higher to 7.3080, hitting a one-year high as traders continued to worry about China's economic outlook. While Beijing is expected to increase fiscal spending in the coming year to support the economy, easier monetary conditions are expected to weaken the yuan.
