NEW YORK :The U.S. dollar retreated from a two-year high on Friday, but was heading for its third consecutive week of gains, with data showing a slowdown in inflation two days after the Federal Reserve delivered a cut to interest rates.
The dollar was down 0.47 per cent on the day against a basket of six other currencies at 107.95 after spiking as high as 108.54 – its highest level since November 2022. It was set to end the week 1 per cent higher.
Commerce Department data on Friday showed the personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – rose 0.1 per cent in November after an unrevised 0.2 per cent gain in October.
But in the 12 months through November, the PCE price index advanced 2.4 per cent compared with a 2.3 per cent increase in the year to October.
“Personal income and personal spending were both under expectations, but the prior month the personal income was revised up, so I think this reaction is going to be fairly muted,” said Helen Given, FX trader at Monex USA, Washington D.C.
The Fed cut interest rates by 25 basis points on Wednesday, with officials indicating that fewer cuts were coming in 2025 as inflation still remained above their targeted range despite its recent downward trajectory.
The yield on benchmark U.S. 10-year notes fell 6.2 basis points to 4.508 per cent, after hitting a 6-1/2 month high following the Fed’s rate decision.
“The annualised PCE print itself, again, slightly under expectations, but we’re still above that 2 per cent target, so I don’t think this is doing to change anything that Jerome Powell said on Wednesday afternoon. I do think it’s still quite likely that the Fed pauses in January.”
The U.S. government will begin a partial shutdown if Congress fails to extend a deadline for a spending bill backed by President-elect Donald Trump to pass by midnight on Friday. The bill failed to pass in the House of Representatives on Thursday.
The dollar weakened 0.5 per cent to 0.894 Swiss francs, but was still set for a second consecutive week of gains.
The euro edged higher after dipping to a one-month low of $1.03435 on the session, on track for its third straight week of losses, weighed down partly by Trump’s comments that the European Union must purchase U.S. oil and gas to make up for its “tremendous deficit” with the world’s largest economy, or face tariffs. It was last up 0.31 per cent at $1.0394.
The dollar dropped to a five-month low of 157.93 Japanese yen after the Bank of Japan left interest rates unchanged. It was last down 0.65 per cent at 156.4 yen.
Sterling dipped to a one-month low of $1.2475 but was last up 0.44 per cent at $1.25575, still on track for a third straight week of losses. The Bank of England (BoE) had kept interest rates on hold on Thursday.
The dollar weakened 0.07 per cent to 7.303 Chinese yuan on the offshore market. The Australian dollar weakened 0.03 per cent to $0.6232, while New Zealand’s dollar strengthened 0.09 per cent to $0.5635.
Currency bid prices
at 20 December
03:08 p.m. GMT
Description RIC Las U.S. Close Pct YT Hig Low
t Previous Cha D h Bid
Session nge Pc Bid
t
Dollar index 107 108.43 -0. 6. 108 107
.94 44 per cent 48 .54 .88
per cent
Euro/Dollar 1.0 1.0364 0.4 -5 $1. $1.
406 1 per cent .7 042 034
3 per cent 4
Dollar/Yen 156 157.335 -0. 10 157 156
.44 58 per cent .9 .87 .35
1 per cent 5
Euro/Yen 162 163.13 -0. 4. 163 162
.82 19 per cent 62 .66 .36
per cent
Dollar/Swiss 0.8 0.8987 -0. 6. 0.8 0.8
937 55 per cent 2 per cent 99 93
Sterling/Dollar 1.2 1.2503 0.4 -1 $1. $1.
554 4 per cent .3 256 247
2 per cent 5
Dollar/Canadian 1.4 1.4399 -0. 8. 1.4 1.4
359 27 per cent 33 435 359
per cent
Aussie/Dollar 0.6 0.6238 0.1 -8 $0. $0.
247 5 per cent .3 624 621
7 per cent 9 5
Euro/Swiss 0.9 0.9312 -0. 0. 0.9 0.9
298 15 per cent 13 319 287
per cent
Euro/Sterling 0.8 0.8287 0.0 -4 0.8 0.8
286 1 per cent .4 313 278
1 per cent
NZ Dollar/Dollar 0.5 0.5631 0.2 -1 $0. 0.5
646 9 per cent 0. 564 615
63 9
per cent
Dollar/Norway 11. 11.4263 -0. 12 11. 11.
394 28 per cent .4 472 391
2 2 per cent 6 8
Euro/Norway 11. 11.856 0.0 5. 11. 11.
859 1 per cent 66 892 849
7 per cent
Dollar/Sweden 11. 11.0238 -0. 9. 11. 11.
024 04 per cent 52 060 012
9 per cent 8
Euro/Sweden 11. 11.4283 0.4 3. 11. 11.
475 1 per cent 14 492 431
per cent 9