US dollar slips after inflation data, Fed meeting looms next week
Volume faded in the afternoon ahead of the weekend and as investors braced next week for a slew of important U.S. economic data such as non-farm payrolls for January and key events led by the Federal Open Market Committee meeting and the Treasury's refunding announcement.
The latter will outline the U.S. government's borrowing requirements for the upcoming quarter.
On the week, the greenback was on track to post gains for four straight weeks.
The dollar index was last down 0.1% at 103.41.
Data showed the personal consumption expenditures (PCE) price index increased 0.2% last month after an unrevised 0.1% drop in November. In the 12 months through December, the PCE price index increased 2.6%, matching November's unrevised gain.
Those numbers were in line with consensus expectations.
The annual inflation rate was under 3% for the third straight month. The Fed tracks the PCE price measure for its 2% inflation target.
«We continue to see pieces of data that suggest at this moment the market shouldn't be concerned about rising inflation in any signficant and immediate capacity,» said Jeff Klingelhofer, co-head of investments at Thornburg Investment Management in Santa Fe, New Mexico.
«That takes further tightening off the table because what the Fed has acknowledged a number of times and continued to point to is that as inflation falls and as their policy rate doesn't move, then the tightness of monetary policy actually increases,» he added.
Currency analysts at MUFG said in a note that U.S.
economic data presented a mixed picture for monetary policy, ahead of the Fed's next policy statement on Jan. 31.
"...the strong end to the year must surely place further doubt on the scope for the Fed to commence its easing cycle
