The U.S. dollar is getting cheaper against the euro, is stable against the pound and getting stronger against the yen.
Traders are focusing on the November U.S. Commerce Department report on Americans’ income and spending, which includes the dynamics of the Consumer Price Index (PCE and Core PCE) closely monitored by the Federal Reserve (Fed).
The Core PCE core inflation index, which excludes changes in food and energy prices, rose 0.2 percent in November from the previous month, the same as in October, experts polled by Dow Jones and The Wall Street Journal predicted. In annual terms, the index increase is expected to slow to 4.6% from 5% a month earlier.
On the eve of the U.S. Department of Commerce significantly improved its estimate of U.S. GDP growth in the third quarter – up to 3.2% in annualized terms from the previously announced 2.9%. This supported the dollar as traders took it as a signal that the Fed will raise the rate higher than expected to curb economic activity and inflationary pressures, Trading Economics said.
The euro/dollar pair was trading at $1.0610 as of 7:50 a.m. Friday versus $1.0598 at the close of the previous session.
The pound to dollar rate was at $1.2043 against $1.2045 the day before.
The value of the U.S. currency in a pair with the yen rose to 132.69 yen against 132.35 yen in previous trading.
Statistics from Japan, released on Friday, showed an acceleration in overall inflation in the country in November to 3.8% on an annualized basis – the highest since January 1991.
Consumer prices excluding fresh food (a key indicator tracked by the Bank of Japan) rose 3.7% year on year last month after climbing 3.6% in September. The rate of growth was the fastest since December 1981. In doing so, the figure exceeded the country’s central bank’s 2% target for the eighth month in a row.
The ICE-calculated index showing the dollar’s performance against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) lost 0.06% in trading, while the broader WSJ Dollar Index lost 0.02%.
