By Gertrude Chavez-Dreyfus
NEW YORK (Reuters) – The U.S. dollar fell on Friday after data showed inflation in the world’s largest economy eased last month, boosting expectations that the Federal Reserve will start cutting interest rates this year.
The dollar initially fell against the yen, which is the currency pair most sensitive to US economic data due to its strong positive correlation with US Treasury yields. But the dollar rose slightly to trade stable during the day, with investors continuing to focus on the large difference in interest rates between the United States and Japan.
The dollar rose slightly against the Japanese currency to 160.815 yen, after earlier recording the highest level in 38 years at 161.27 yen. Traders remained on high alert in anticipation of the Japanese authorities intervening to enhance the value of its currency.
The US currency recorded monthly and quarterly gains against the yen of about 1.9% and 5.9%, respectively.
The U.S. personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, was unchanged last month, data showed, after an unrevised 0.3% gain in April. In the 12 months through May, the PCE price index rose 2.6% after rising 2.7% in April.
“The PCE report was mostly in line with expectations, confirming the deflationary trend as seen in the CPI (Consumer Price Index) and PPI (Producer Price Index) numbers in Earlier this month.” , Austria. “Macro data continues to point to a slowdown in the US economy.”
Following the inflation data, the odds of a September policy easing rose slightly to about 67%, up from about 65% late Thursday, according to calculations by the London Stock Exchange. The market also expects one or two rate cuts of 25 basis points each this year.
A separate report released on Thursday showed that business activity in the Midwest was better than expected, which helped the dollar modestly. The Chicago PMI rose to 47.4 from 35 in May, better than the 40 that economists had expected.
Meanwhile, the University of Michigan consumer sentiment index came in better than expected at 68.2 for June, also supporting the dollar. In addition, respondents to the consumer confidence survey expect inflation expectations to hold steady at 3% in the near and long term.
Investors will now focus on next week’s U.S. nonfarm payrolls report, which Wall Street economists expect to see an increase of 195,000 jobs in June, compared with 272,000 in May.
“Next week’s employment report will give us the opportunity to see if the labor market is slowing,” David Donabedian, chief investment officer at CIBC Private Wealth, said in email comments.
“This number would be a big surprise to the downside to indicate that the Fed will take action in July to cut interest rates. We expect the Fed to remain steady unless the labor market starts to falter.”
In other currencies, the euro rose 0.1% to $1.0709.
The euro fell 1.3% against the dollar in June, heading for its biggest monthly decline since January, as political uncertainty in the run-up to France’s general election weighed.
In the second quarter, the single European currency fell by 0.7%.
Investors fear that the new French government will increase fiscal spending, threatening the sustainability of the country’s public debt and the bloc’s financial stability.
Against the Swiss franc, the dollar was little changed at 0.8986 francs.
Aside from economic data, market participants also focused on US politics.
Republican presidential candidate Donald Trump launched a series of sometimes false attacks on President Joe Biden in their first presidential debate in Atlanta, with the dollar rising after Biden stumbled over his words several times early in the debate.
The debate has increased the odds that Trump will win the presidency and impose tariffs on imports. Traders have generally bought dollars as the Trump administration has proposed tougher tariffs that could lead to inflation and higher interest rates.
currency
tender
Prices in
June 28
04:28
Evening GMT
RIC described the latest percentage in the United States to date the highest and lowest percentage
On closing the change quote
former
a class
Dollar 105.79 105.89 -0.08% 4.36% 106.13 105.
Index 78
EUR/USD 1.072 1.0704 0.15% -2.88% $1.0722 $1.0
p. 685
USD/JPY 160.84 160.81 0.02% 14.03% 161.27 160.
N 305
EUR/JPY 1.072 172.06 0.22% 10.79% 172.44 171.
46
USD/CHF 0.8985 0.8988 -0.03% 6.76% 0.901 0.89
Issue 8
GBP/USD 1.2645 1.2639 0.06% -0.62% $1.267 $1.0
Dollar 685
USD/CAD 1.368 1.3701 -0.14% 3.21% 1.3734 1.36
76 clubs
AUD/DO 0.6674 0.6648 0.4% -2.11% $0.6685 $0.6
62
EUR/Switzerland 0.9629 0.9617 0.12% 3.69% 0.9639 0.96
Q1
EUR/USD 0.8474 0.8468 0.07% -2.24% 0.8481 0.84
Ling 58
New Zealand 0.6095 0.6083 0.19% -3.55% 0.6101 0.60
USD/DU 58
Lebanese pound
$/number 10.6637 10.6221 0.39% 5.22% 10.6948 10.6
Route 116
EUR/NW 11.4325 11.3732 0.52% 1.86% 11.4347 11.3
He is 67
USD/CHW 10.5942 10.6226 -0.27% 5.24% 10.6618 10.5
Aden 83
EUR/Sweden 11.3586 11.3755 -0.15% 2.1% 11.4033 11.3
In 364