By Chibuike Oguh
NEW YORK (Reuters) – The U.S. dollar pulled back from a two-year high on Friday, but was heading for a third straight week of gains, with data showing a slowdown in inflation two days after the Federal Reserve cut interest rates. cut and mark. rampant inflation was enough to reduce cuts in 2025.
The dollar was down 0.72% against a basket of six other currencies at 107.64 after touching as high as 108.54 – the highest level since November 2022. It was expected to end the week 0.72% higher.
Commerce Department data showed that the personal consumption expenditures price index – the Fed's favorite inflation gauge – rose 0.1% in November after a modest 0.2% gain in October.
But in the 12 months through November, the PCE price index advanced 2.4%, compared with an increase of 2.3% in the year to October.
The Fed cut interest rates by 25 basis points on Wednesday, with officials hinting that fewer cuts were coming in 2025 as inflation remained above the target range despite the recent slowdown .
The yield on the benchmark US 10-year note fell 6.2 basis points to 4.51%, after hitting a 6-1/2-month high following the Fed's rate decision.
“Today's inflation numbers were more erratic than feared; the Fed shifted its focus back towards inflation in this week's meeting, and then the numbers were less worrying,” said Adam Button, chief currency analyst at ForexLive.
“I think the market heard the Fed's words and was worried about inflation. But then the numbers show it's still slow and certainly not at alarming levels .
The US government will begin a partial shutdown unless Congress extends a deadline for a spending bill backed by President-elect Donald Trump to pass by midnight Friday. The bill did not succeed in the House of Representatives on Thursday.
The dollar weakened 0.79% to 0.892 Swiss francs, on track for a weekly loss.
The euro edged higher after falling to a one-month low of $1.03435 on the session, on track for a third straight week of losses, weighed in part by Trump's comments that the European Union to buy more US oil and gas to make up for. its “horrendous deficit” with the world's largest economy, or face tariffs. changed so far -0.76% compared to yesterday.
The dollar fell to a five-month low of 157.93 Japanese yen after the Bank of Japan left interest rates unchanged. It was last down by 0.89% at 156.01 yen.
Sterling fell to a one-month low of $1.2475 but was finally up 0.77% at $1.25990, still on track for a third straight week of losses. The Bank of England kept interest rates on hold on Thursday.
the dollar weakened 0.18% to 7.295 on the offshore market. The Australian dollar weakened 0.43% to $0.6263, while the New Zealand dollar strengthened 0.53% to $0.566.
“Basically you have an interest rate play between the Fed meeting on Wednesday and that's not what they did, but the trigger was the change in the economic projections for the Fed funds rate next year,” Joseph said. Trevisani, senior analyst at FXStreet.com.
“The market sees the Fed pulling back. I've long believed they would stop in January. I'm pretty sure they will.”
Currency bid prices at 20 December 06:57 PM GMT
Last US RIC Description Close Previous Session Pct Change YTD Pct Bid High Bid Low
Dollar index 107.66 108.43 -0.7% 6.20% 108.54 107.58
Euro/Dollar 1.0438 1.0364 0.72% -5.43% $1.0445 $1.0344
Dollar/Yen 156.09 157.335 -0.77% 10.69% 157.875 155.975
Euro/Yen 162.93 163.13 -0.12% 4.69% 163.66 162.36
Dollar/Swiss 0.892 0.8987 -0.76% 5.97% 0.899 0.8917
Sterling/Dollar 1.2595 1.2503 0.76% -1.01% $1.2613 $1.2475
Dollar/Canadian 1.4361 1.4399 -0.25% 8.35% 1.4435 1.4336
Austria/Dollar 0.6263 0.6238 0.46% -8.1% $0.6274 $0.6215
Euro/Swiss 0.9308 0.9312 -0.04% 0.24% 0.9319 0.9287
Euro/Sterling 0.8284 0.8287 -0.04% -4.43% 0.8313 0.8272
NZ Dollar/Dollar 0.566 0.5631 0.55% -10.4% $0.5672 0.5615
Dollar/Norway 11.3073 11.4263 -1.04% 11.57% 11.4726 11.3077
Euro/Norway 11.8051 11.856 -0.43% 5.18% 11.892 11.8072
Dollar/Sweden 11.0032 11.0238 -0.19% 9.3% 11.0608 10.9884
Euro/Sweden 11.4869 11.4283 0.51% 3.25% 11.4929 11.431
