The US dollar fell on Friday, easing from a roughly two-month high against the yen touched in the prior session and slumping against the euro, after weaker-than-expected US economic data raised doubts about whether the US Federal Reserve would assume a hawkish bent through the end of the year.
The US core consumer price index (CPI) last month increased 1.9 percent annually, the smallest gain since October 2015.
Economists polled by Reuters expected the inflation measure to remain at 2 percent.
In addition, the US Department of Commerce said retail sales rose 0.4 percent last month.
While March saw an upwardly revised 0.1 percent gain, last month’s figure disappointed expectations of economists polled by Reuters for an increase of 0.6 percent.
Federal funds futures implied traders saw about a 49 percent chance the Fed would increase rates twice by the end of this year shortly after the data, compared with 54 percent just before the release of the latest readings on US store sales and the consumer price index, CME Group’s FedWatch program showed.
NO URGENCY
“It’s building on a theme of the last several months which is the actual inflation prints on the core are very non-threatening,” said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York, in reference to the core CPI reading. “The Fed is still going to be hiking probably two more times this year, but the urgency to act and deliver a hawkish thrust to their actions is not there.”
In Taipei, the New Taiwan dollar on Friday rose NT$0.014 against the US dollar to close at NT$30.201, gaining 0.06 percent from last week’s NT$30.182.
The euro on Friday rose as much as 0.7 percent against the US dollar to a session high of US$1.0934.
The common currency had on Thursday fallen to a more than two-week low of US$1.0838. It is down 0.6 percent from last week’s US$1.099.
WEEKLY GAINS
The US dollar on Friday fell as much as 0.6 percent against the yen to a session low of ￥113.21 before closing at ￥113.35. It had on Thursday hit a roughly two-month high of ￥114.36.
The greenback rose 0.6 percent against the yen from last week’s ￥112.71.
The US dollar index, which measures the greenback against a basket of six major rivals, on Friday fell 0.4 percent to 99.274, but still gained about 0.6 percent for the week to notch its first gain in five weeks.
Friday’s inflation data hurt the US dollar partly because it was disappointing after strong US import and producer price readings for last month released earlier this week, said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
“The CPI data didn’t confirm what those other two data sets said about inflation,” he said.
Additional reporting by CNA
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