US Dollar Index Moves Above 109.00, Upside Limited Amid Fed Dovishness
The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, snapped a four-day losing streak, trading near 109.10 during Asian hours on Friday (17/1). However, the greenback struggled as weaker US Retail Sales and persistent inflation data reinforced market expectations that the Fed will cut interest rates twice this year.
US Retail Sales rose by 0.4% MoM in December to $729.2 billion. This reading was weaker than market expectations of a 0.6% increase and lower than the previous reading of a 0.8% increase (revised from 0.7%).
The US core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 3.2% year-on-year (YoY) in December, slightly below the previous month’s 3.3% increase and market expectations of 3.3%. On a monthly basis, the core CPI grew 0.2%, compared with a 0.3% increase in the previous month.
The growing dovish sentiment surrounding the Fed has led to a decline in US Treasury yields, with the 2-year and 10-year notes now at 4.23% and 4.60%, respectively. Both yields are expected to post weekly declines of more than 3%.
Chicago Federal Reserve Bank President Austan Goolsbee said on Thursday that he has become increasingly convinced over the past few months that the job market is stabilizing at levels resembling full employment, rather than deteriorating into something worse, according to Reuters. (AL)
Source: FXstreet
