U.S. Dollar Retreats Slightly After Inflation Data

21:39, 28th January 2022

(RTTNews) - The U.S. dollar erased its early gains against its key counterparts in the European session on Friday, as the latest inflation data lessened expectations for an aggressive tightening of monetary policy by the U.S. Federal Reserve.

Data from the Commerce Department showed that the annual rate of core consumer price growth accelerated to 4.9 percent in December from 4.7 percent in November. Economists has expected a 4.8 percent increase.

Personal income rose by 0.3 percent in December after climbing by an upwardly revised 0.5 percent in November.

Economists had expected personal income to advance by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the report showed personal spending fell by 0.6 percent in December after rising by 0.4 percent in November. The decrease in spending matched economist estimates.

The currency showed mixed trading in the Asian session. While it rose against the yen, it held steady against the euro and the franc. Versus the pound, it fell.

The greenback dropped to 1.3427 against the pound, down from a high of 1.3365 seen at 4:15 am ET. The pound-greenback pair had ended yesterday's trading session at 1.3382. The greenback may face support around the 1.39 level.

The greenback eased to 1.1173 against the euro, after rising to a 1-1/2-year high of 1.1121 at 3:30 am ET. The pair was worth 1.1145 when it closed deals on Thursday. The currency is likely to face support around the 1.15 region.

Survey results from European Commission showed that Eurozone economic confidence weakened to a nine-month low in January largely driven by the weakness in services and construction.

The economic confidence index fell unexpectedly to 112.7 in January from 113.8 in December. The score was forecast to rise to 114.5.

The greenback retreated to 115.25 against the yen, from more than a 2-week high of 115.69 hit at 3 am ET. The pair had closed Thursday's deals at 115.37. On the downside, 114.00 is possibly seen as its next support level.

Data from the Ministry of Internal Affairs and Communications showed that Tokyo inflation rose 0.5 percent on year in January.

That was shy of expectations for an increase of 0.6 percent and was down from 0.8 percent in December.

The greenback pulled back to 0.9294 against the franc, after a rise to 0.9329 at 8:05 am ET. At yesterday's trading close, the pair was quoted at 0.9305. If the greenback slides further, 0.90 is possibly seen as its next support level.

Survey results from the KOF Swiss Economic Institute showed that a leading indicator of turning points in Switzerland's economy rose unexpectedly in January, for the first time in eight months, signaling a favorable outlook.

The economic barometer rose to a three-month high of 107.8 from 107.2 in December, which was revised from 107.0. Economists had expected the reading to drop further to 106.3.

In contrast, the greenback climbed to a fresh 3-week high of 1.2797 against the loonie, 1-1/2-year highs of 0.6968 against the aussie and 0.6533 against the kiwi, from yesterday's closing values of 1.2740, 0.7034 and 0.6582, respectively. The greenback is seen finding resistance around 1.30 against the loonie, 0.68 against the aussie and 0.64 against the kiwi.