Investing.com – The US dollar slipped slightly on Friday, pausing for breath after strong gains this week as traders await the release of the Fed's favorite inflation gauge.
At 04:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% lower at 107.960, after its earlier this week climbed to a two-year high.
Dollars on course for weekly benefits
This has slipped slightly on Friday, but is still riding on weekly gains of around 1%, bolstered by a rather hawkish US rate outlook following the last Federal Reserve policy meeting of the year earlier. week.
US central bank policymakers now see only an additional 50 basis points of easing in 2025, two likely cuts of 25 basis points, instead of the four reductions indicated in the forecasts before in September.
November is expected to rise 2.9% annually, up from 2.8% the previous month, while the monthly figure is seen climbing 0.2%, a slip from 0.3% in October.
A stronger-than-expected rise in the core PCE index could have a big impact on markets, as the hawkish nature of the Fed's comments has shifted the likelihood of fewer or perhaps no further cuts. – year.
“Market prices moved sharply and towards our view of just one more 25 bps cut outlined in our team's 2025 outlook,” Macquarie analysts said in a note.
Sterling near one-month low after weak retail sales
In Europe, trading largely flat at 1.2500, after falling on Thursday to a one-month low after Bank of England policymakers voted 6-3 to keep interest rates on hold on Thursday, a wider gap than expected, amid concerns about a slowing economy.
Data released earlier on Friday showed Britain's economy rose a weaker-than-expected 0.2% in November, below the expected 0.5% jump.
it rose 0.2% higher to 1.0385, just off a one-month low, and still on track for a weekly drop of more than 1% on the back of the dollar's strength.
It rose unexpectedly in November, up 0.1% on the year, instead of the 0.3% decline expected, and the business climate index in the German retail sector fell slightly, Institute said. Ifo Friday.
This year was very challenging for the retail sector and the overall economic environment is likely to remain difficult in 2025, “although many retailers are hoping for an improvement in consumer sentiment,” said Ifo expert Patrick Hoeppner .
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.
Yen helped by CPI data
In Asia, it fell 0.4% to 156.74, as the November reading was slightly stronger than expected, strengthening the case for an eventual rate hike with the .
But the yen nursed a fall to its weakest level in five months on Thursday, after comments from Governor Kazuo Ueda suggested a hike will come later rather than sooner in 2025.
0.1% higher to 7.3050, hitting its highest level since November 2023.
The People's Bank of China left its benchmark unchanged on Friday, as widely expected, with the central bank seen as having little room to cut rates further amid the yuan's persistent weakness.
