Investing.com – The US dollar was steady on Thursday after losing the previous session on lower inflation, while the pound fell following the release of weak growth data.
At 04:45 ET (09:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading slightly higher at 108,950, off three days of losses.
The dollar remains high
The dollar fell on Wednesday after the release of a favorable report, which followed a modest reading on US producer prices on Tuesday.
“Global asset markets have had a positive 24 hours, largely thanks to the marginally sub-consensus US core CPI reading for December,” ING analysts said in a note.
“However, persistent headlines and core inflation near 3% annualized still cast doubt on the Fed’s ability to cut this year, and only 36 bps of Fed easing is priced in for 2025.”
The dollar also remains high ahead of Donald Trump’s inauguration next week, as his plans to impose tough tariffs on both allies and adversaries have also fueled concerns about price pressures.
There is data to digest later in the session, but today’s forex focus will likely be on the Senate confirmation hearing of Scott Bessent, Trump’s nominee for US Treasury Secretary.
“He will be asked about the dollar, tariffs and the upcoming budget agenda. We don’t think he will disrupt the strong dollar again,” ING said.
Pound sterling falls on weak GDP figures
In Europe, trading traded 0.3% lower at 1.2199 after data published earlier Wednesday showed the British economy barely returning to growth in November.
According to official data, gross domestic product rose 0.1% from October, marking the first month-on-month increase since August, following declines in September and October. However, this was still below the forecast increase of 0.2%.
The Bank of England is now widely expected to cut rates in February, with two rate cuts in 2025 almost fully priced into the market.
fell slightly to 1.0290, with German and Italian inflation data confirming that prices remained subdued in December.
“Yesterday presented a great opportunity for the EUR/USD to rise. The two-year interest rate spread has been reduced by 5 basis points, compared to 0.2% on the US core index. Still, the EUR/USD struggled to maintain the rally at 1.0350. Not very impressive and may reflect a belief that the eurozone and the euro will underperform this year due to weak growth and leadership in the region,” ING said.
The European Central Bank widely expected interest rates to be cut by around 100 basis points in 2025, far more than the Federal Reserve, suggesting further weakness ahead for the single currency.
The yen continues to gain
In Asia, interest rates fell 0.4% to 155.75, the lowest level since mid-December.
The yen rose this week as BOJ Governor Kazuo Ueda indicated the central bank will consider raising interest rates at its meeting next week, amid steady growth in inflation and wages.
traded largely unchanged at 7.3317 and hovering around a 16-month high as focus shifted to key fourth-quarter gross domestic product data due on Friday.
