Dollar steady as markets assess higher-than-expected US CPI



The dollar held steady against other major currencies on Friday, as investors weighed an ambiguous U.S. consumer price inflation report against market bets that the Federal Reserve will cut rates as soon as March.

U.S. consumer prices increased in December as rents maintained their upward trend, edging 0.3% higher for the month and up an annual 3.4%, versus economists' forecast in a Reuters poll for a 0.2% gain and 3.2% rise, respectively.

Still, traders are pricing in a 73.2% chance for the Fed's first 25 basis point (bps) cut to come in March, with several more to follow, according to the CME Group's (NASDAQ:CME) FedWatch Tool.

"Once again, we see a disparity between market pricing, data and the Fed’s narrative," said Senior Market Analyst at City Index Matt Simpson.

"The U.S. dollar didn’t behave in such a way to suggest USD bears are running scared," he said.

The dollar index was firm at 102.25, down from Thursday's high of 102.76 but well ahead of the five-month low of 100.61 hit in December when traders began to aggressively price in a raft of Fed cuts for this year.

Fed officials took little fresh from the data, with Chicago Fed Bank President Austan Goolsbee signalling he's not sure if there's been enough progress for the Fed to start cutting rates.

"When we have weeks or months of data to come, I don't like tying our hands," he said.

Cleveland Fed President Loretta Mester said on Thursday that the latest CPI figures means that it would likely be too soon for the central bank to cut its policy rate in March.

"What is important for the Federal Reserve is that the last mile in bringing inflation back to target appears to be more difficult," wrote Commerzbank (ETR:CBKG) analysts in a note, adding that they expect the first rate cut will not come in March as markets are betting.

The euro stuck around $1.0977 after gaining on the dollar the previous day, while sterling was last trading at $1.2776, up 0.1% on the day.

The Japanese yen, meanwhile, hovered around 145.11 per dollar, keeping off the one-month low of 146.41 hit against the greenback on Thursday.

The yen was aided by easing U.S. Treasury yields, which remained down around 3.98% following the CPI data. [US/]

The offshore yuan was largely flat at 7.170, despite fresh economic data suggesting the economy was starting the year on shaky footing, as regulators continued to support the currency amid expectations policymakers will soon have to roll out more stimulus.

Elsewhere in Asia, the Taiwan dollar was largely unchanged ahead of Saturday's pivotal presidential and parliamentary elections. [EMRG/FRX]

In cryptocurrencies, bitcoin last stood mostly unchanged at $46,118.00, having surged to a two-year high overnight after the U.S. Securities and Exchange Commission on Wednesday gave the green light to offer ETFs linked to bitcoin.

Ether (ETH=BTSP) was down 0.27% at $2,596.50.

Source : Economy News by Reuters / Jan 12, 2024 logo


240 rue Evariste Galois,

06410 Biot,

Sophia Antipolis

Automata Pay

65-66 Warwick House 4th

Floor, Queen Street, London

England, EC4R 1EB

Automata Pay Europe Ltd

3rd Floor Ormond Building,

31-36 Ormond Quay Upper,

Dublin 7, D07 Ee37

Automata ICO Ltd

Italian Branch

Via Archimede, 161,

00197 Roma


The purchase of digital assets is subject to a high market risk and price volatility. Changes in value can be significant and occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and returns can fluctuate both up and down, and you may not recover the amount you invested. RISK WARNING

Automata ICO Limited has a branch in Italy with its registered office at Via Archimede, 161, Roma, Italy, and registered in Italy under number 96550860587 with the Organismo Agenti e Mediatori (OAM) as a Virtual Asset Service Provider (VASP).

Automata France SAS is a company registered in France with the company number 902 498 617. Automata FRANCE SAS is registered with the french Financial Market Authority, l’Autorité des marchés financiers (“AMF”), as a provider of Virtual Asset Service Provider under number E2023-087.

Automata Pay Europe Limited is a partner of Modulr Finance B.V., a company registered in the Netherlands with company number 81852401, which is authorised and regulated by the Dutch Central Bank (DNB) as an Electronic Money Institution (Firm Reference Number: R182870) for the issuance of electronic money and payment services. Your account and related payment services are provided by Modulr Finance B.V. Your funds will be held in one or more segregated accounts and safeguarded in line with the Financial Supervision Act. How we keep your money safe.