Investing.com – The dollar dropped against a basket of major currencies on Friday after inflation data undershot expectations threaten the prospects for a December rate increase.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.14% to 92.81.
The labor Department said on Friday its consumer price Index rose 0.5% last month after advancing 0.4% in August. The missed economists forecast of 0.6% rise.
The slowdown in inflation reduced the expectations for a December interest rate increase in the midst of the recent comments from Fed officials push the Central Bank to additional rate increases, to the trend of the slowdown of inflation subsided.
Louis Fed President James Bullard, warned on Thursday that the Central Bank improved should cease to raise interest rates until the rate of inflation.
«If you go to an inflation target that should defend you. If you say you go to the inflation target, then you should try to beat it and keep credibility,» Bullard said in an interview with Reuters.
Some analysts, however, were quickly shut down, the softer inflation data in the Wake of the recent hurricanes Harvey and Irma.
«What is a burden for the dollar is the soft core inflation data,» said Viraj Patel, FX strategist at ING, adding that the headline-expected data will be distorted by the effects of the hurricanes that hit the USA in September.
Meanwhile, retail sales rose by 1.6%, said their biggest gain since 2015, the Ministry of Commerce on Friday. Economists had expected, up 1.7%.
Also on the dollar, a rise in the pound was weighed in a nearly two-week high after a slump in the previous session after Brexit negotiator, the talks between the United Kingdom and the European Union declared it had reached a cul-de-SAC.
GBP/USD rose 0.29% to $1.3302.
EUR/USD gained 0.08% to $1.1840, while EUR/GBP lost 0.21% to £0.8901.
USD/CAD added 0.32% to C$1.2519, while USD/JPY up 0.34% to Y111.90.