USD/JPY Is Below 130, EUR/USD Is Trading Above 1.0680 And The Aussie Pair Is Keeping Its Range Around 0.6950.
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The US dollar rose against its major trading partners early Friday, apart from the yen.
US data showed that the consumer price index fell by 0.1% m/m in December. The core CPI, which takes into account volatile energy and food prices, increased by 0.3% over the same period. Finally, as expected, the annual core CPI amounted to 5.7%, down from 6% in November. Although the US dollar struggled to find direction in its initial reaction to the US inflation report, dovish comments from Fed officials sent US Treasury yields plummeting and weighed heavily on the currency.
Fed speakers this week, including Fed Chairman Jerome Powell on Tuesday, generally agreed that the US economy is likely to slow in 2023, but without a recession.
Fed officials have suggested further, smaller rate hikes will be needed early in the year before pausing at some point.
In the second half of the day, the University of Michigan will publish a preliminary consumer sentiment survey for January.
USD/JPY
The yen continued to benefit from speculation that Japan might revise its ultra-loose monetary policy. Japan's central bank is an exception in sticking to stimulus while most countries are in tightening mode, but signs of more sticky inflation have emboldened some investors to assume that this will change, which should strengthen the yen.
The generally positive tone in equity markets is weakening the safe haven of the Japanese yen and providing some support for USD/JPY. The rally, however, remains capped as new US dollar sales emerge, weighed down by expectations that the Federal Reserve will tone down its hawkish stance.
USD/JPY fell sharply after data showed US inflation was declining and the pair's bias was bearish. Currently, the pair is trading below 130 at 128.7020
GBP/USD
GBP/USD benefited from widespread selling pressure around the US dollar and reached its highest level since December 15 at 1.2250. However, the cable failed to stay above 1.2200 and is now below 1.2200. GBP/USD Pair trades around 1.2180.
The pound rose on Friday against both the dollar and euro after data showed U.S. inflation cooled in December and the British economy beat expectations in November. Monthly UK GDP rose to 0.1% vs expected drop to -0.3%.
Source: investing.com
EUR/USD
EUR/USD surged to its highest level since April last year in the wake of the US CPI hit. The pair trades above 1.0800.
EUR/USD retreated to around 1.0850 on Friday after reaching its highest level since April at 1.0868 late Thursday. The short-term technical outlook suggests the pair may make a technical correction ahead of the next uptrend, but losses are likely to remain contained.
Dovish comments from Fed officials, however, made sure that investors continued to move away from the US Dollar. On the flip side, European Central Bank (ECB) policymaker Martins Kazaks said that there was no rationale for markets to bet on a rate cut and added that rates should rise well into the restrictive territory.
AUD/USD
AUD/USD is keeping its range around 0.6950.
The increase in risk appetite helped commodity and growth-linked currencies find support, with the Australian dollar and the Norwegian krone being the biggest beneficiaries.
The aussie was also supported recently by robust domestic data, with Australia’s retail sales and trade surplus rising more than expected in November.
Source: investing.com, finance.yahoo.com
