At 03:10 ET (07:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 106.222, just off Thursday’s high of 106.60, when the index registered its biggest one-day percentage jump since March.
Headline U.S. consumer prices grew at a faster-than-anticipated rate in September, data showed Thursday, potentially complicating the Federal Reserve’s upcoming policy decisions aimed at corraling elevated inflation.
The consumer price index registered a rise of 3.7% on an annual basis, the same pace as in August, and rose by a larger-than-forecast 0.4% month-on-month. Economists had expected readings of 3.6% and 0.3%.
This data stoked expectations that the Federal Reserve is perhaps not yet done with monetary tightening, boosting the dollar, even with many officials pointing to the recent run-up in Treasury yields as lessening the need to further tighten financial conditions.
Markets are now pricing in about a 40% probability of a rate hike in December, versus a 28% chance before the report.
The University of Michigan’s consumer sentiment reading for October is due out later in the session, and traders will also be studying earnings from a number of major banks for clues about the health of the economy.
EUR/USD rose 0.1% to 1.0537, after a sharp drop during the previous session, with more inflation data emerging in the eurozone.
French CPI climbed 4.9% on the year in September, while Spanish consumer prices rose 3.5%, both still above the European Central Bank’s medium-term target.
ECB policymaker Francois Villeroy de Galhau repeated his view on Thursday that the central bank should keep its key interest rate at its current level – the highest in its 25-year history – for as long as necessary to ensure inflation returns back to its 2% goal.
USD/CNY rose 0.1% to 7.3078 after China’s exports for September shrank by 6.2% from a year earlier, while imports also declined by 6.2%, showing that the second-largest economy in the world remained in a difficult position.
That said, these figures both contracted at a slower pace than the previous month, adding to recent evidence that the world’s second-biggest economy is stabilising.
Elsewhere, GBP/USD rose 0.2% to 1.2193, AUD/USD rose 0.1% to 0.6319 and NZD/USD fell 0.2% to 0.5916.
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