Investing.com – The US dollar moved higher on Friday but was on track for a weekly loss after core inflation eased, while sterling retreated following the release of weak retail sales data.
At 04:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 108.930 but was forecast for a decline of around 0.5% during the week. would snap a six-week winning streak.
Dollar set to weekly loss
The dollar has retreated this week after cooler-than-expected data raised the possibility of looser monetary policy this year, even after policymakers at the Federal Reserve signaled they will be cautious in its approach to rate cuts this year.
The Fed governor said Thursday that three or four rate cuts are still possible if economic data weakens further.
“The perception at the end of a busy week in macro news is that optimism around a month-on-month slowdown in core inflation is cautious at best,” ING analysts said in a note.
“The inherently forward-looking markets are factoring in Trump’s inflation policy from a starting point that is already significantly above target. So despite the extensive positioning and overvaluation in the short term, the dollar continues to avoid the real catalysts for a correction.”
Sterling is falling after a dip in retail sales
In Europe, trading fell 0.4% lower to 1.2197 after the British fell unexpectedly in December, falling 0.3% month-on-month in December following a downwardly revised 0.1% expansion in November, leaving the risk of an economic contraction in the fourth month increased. quarter.
Data released earlier this week showed the UK economy barely returning to growth in November.
Rates are expected to be cut in February, with two rate cuts in 2025 largely priced into the market.
fell slightly to 1.0300, ahead of the publication of the final eurozone for December.
“EUR/USD appears to have found a short-term anchor near 1.0300. That is a level that implies a risk premium of 2.5-3% (i.e. undervaluation), which we suspect will not be materially reduced until there is more clarity on Trump’s protectionism policy,” ING said.
The yen is nearing a one-month high
In Asia, yields rose 0.3% to 155.79, near the strongest level in almost a month.
The yen strengthened sharply this week after several Bank of Japan officials suggested a rate hike was possible at next week’s central bank meeting.
traded 0.1% lower at 7.3289, after hitting a more than a year high this week.
China’s economy grew 5.4% in the fourth quarter, more than the 5% expected, after a barrage of recent stimulus measures paid off.
