Euro and Sterling Remain Steady
The euro slipped 0.06% against the greenback to $1.1019, but it remained in close range of its more than four-month top of $1.1040 hit last week. Sterling, on the other hand, saw little change at $1.2701. Meanwhile, the Australian and New Zealand dollars hovered near their respective five-month peaks.
Dollar Index Languishes as Inflation Falls in the U.S.
The dollar index found itself near a five-month low of 101.42 hit last week and currently stands at 101.65. Recent data shows that U.S. prices fell in November, marking the first decline in over three and a half years. This has led to an annual increase in inflation dropping further below 3% and has increased market expectations of an interest rate cut from the Federal Reserve in March. The Fed’s recent statement, opening the door to potential rate cuts in 2024, has also contributed to the dollar’s decline.
“The Fed has made considerable progress on inflation, as core started the year closer to an annual rate of 5%, though the job is not yet done in ensuring inflation is on a sustained trajectory toward its 2% target,” stated Wells Fargo analysts.
Yen Rises as BOJ Governor Hints at Policy Shift
In Asia, the yen rose 0.1% to 142.20 per dollar, receiving additional support from comments made by BOJ Governor Kazuo Ueda. Ueda suggested the possibility of a policy shift, stating that the likelihood of achieving the central bank’s inflation target was “gradually rising.” He added that the BOJ would consider changing its policy if prospects of sustainably achieving the 2% target increased “sufficiently.” However, he clarified that the BOJ has not yet decided on a specific timing to change its ultra-loose monetary stance.