NEW YORK: The U.S. dollar fell on Friday after data showed that U.S. consumer spending was flat in May, while producer price inflation came in below economists’ expectations.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, held steady following an upwardly revised 0.9per cent jump in April. Economists polled by Reuters had forecast consumer spending rising 0.4per cent.
The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5per cent, below economists’ expectations of a 0.6per cent increase. In the 12 months through May, the so-called core PCE price index shot up 3.4per cent, the largest gain since April 1992.
“The most interesting, salient takeaway from today’s data is that we’re not seeing runaway inflation,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. “The Fed by holding its fire is probably on the right side of the trade at this point.”
The dollar index against a basket of currencies fell 0.26per cent to 91.598.
It rose to a two-month high last Friday after policymakers at the Fed on June 16 forecast two rate hikes in 2023, indicating that the U.S. central bank will address rising price pressures sooner than previously expected.
The greenback slipped this week, however, as Fed speakers offered contrasting views on whether inflation increases are likely to be sustained.
Infrastructure spending is likely to help boost the U.S. economy after President Joe Biden announced a deal on Thursday, though it is not expected to make an impact in the short-term.
Sterling continued to weaken, a day after the Bank of England made no changes to its monetary policy.
The British pound was last down 0.08per cent on the day at US$1.3909.
The greenback weakened to 110.58 Japanese yen, after reaching a 15-month high of 111.11 on Thursday.
That comes even as data on Friday showed that core consumer prices in Tokyo were unchanged in June from a year earlier.
“Japan is a total outlier when it comes to one of the most crucial data points in the market’s focus right now: inflation. It showed that Japan, unique among the major countries of the world, has no inflation,” Marshall Gittler, head of investment research at BDSwiss, said in a report.
Currency bid prices at 9:45AM (1345 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Dollar index 91.5980 91.8470 -0.26per cent 1.797per cent +91.8610 +91.5730
Euro/Dollar US$1.1964 US$1.1931 +0.29per cent -2.07per cent +US$1.1968 +US$1.1928
Dollar/Yen 110.5750 110.8300 -0.23per cent +7.06per cent +110.9800 +110.5000
Euro/Yen 132.29 132.27 +0.02per cent +4.23per cent +132.4500 +132.1400
Dollar/Swiss 0.9151 0.9180 -0.30per cent +3.45per cent +0.9182 +0.9148
Sterling/Dollar US$1.3909 US$1.3922 -0.08per cent +1.82per cent +US$1.3935 +US$1.3892
Dollar/Canadian 1.2289 1.2319 -0.24per cent -3.49per cent +1.2329 +1.2285
Aussie/Dollar US$0.7607 US$0.7583 +0.33per cent -1.10per cent +US$0.7616 +US$0.7580
Euro/Swiss 1.0946 1.0951 -0.05per cent +1.29per cent +1.0963 +1.0946
Euro/Sterling 0.8600 0.8569 +0.36per cent -3.77per cent +0.8604 +0.8569
NZ US$0.7088 US$0.7062 +0.40per cent -1.27per cent +US$0.7095 +US$0.7060
Dollar/Norway 8.4630 8.5040 -0.53per cent -1.49per cent +8.5025 +8.4580
Euro/Norway 10.1257 10.1360 -0.10per cent -3.26per cent +10.1580 +10.1180
Dollar/Sweden 8.4500 8.4677 +0.08per cent +3.09per cent +8.4855 +8.4470
Euro/Sweden 10.1112 10.1031 +0.08per cent +0.35per cent +10.1231 +10.1040
(Reporting by Karen Brettell)