The Dollar Fell Against the Major Currencies

The US dollar fell against other major currencies on Friday as concerns about the state of the US economy resurfaced ahead of producer inflation data later in the day and a Federal Reserve interest rate meeting next week.

Following a lull in market-moving news, investors look forward to rate announcements from the Fed, the ECB, and the BoE next week.

Markets expect that all three will gradually increase interest rates—with an average increase of 0.5% points—while continuing to try to contain inflation.

After Tuesday’s consumer price data release, the United States producer price inflation data will be closely scrutinized for any indications that price increases are slowing. On Thursday, data showed a steady increase in US jobless claims, raising investor concerns about the outlook.

The dollar index compares the US currency to a basket of six major currencies. It was last down 0.1% at 104.680.

The index has risen by about 9.5% this year, but the fourth quarter decline of more than 6% is due to lower inflation and interest rate expectations. Markets expect a 93,23% chance that the Fed will increase its benchmark rate by 0.5 percentage points at its meeting on December 14 and a 7% chance of a 0.75 percentage point increase.

The euro was trading at $1.05580, flat against the greenback, close to the six-month high it reached earlier in the week, and on pace to post gains for a third straight week. Sterling rose 0.21% on the day to $1.22680, not far from Monday’s six-month high of $1.23415, as the government announced reforms to keep London one of the world’s most competitive financial hubs.

The Japanese yen increased by up to 0.7% and was up 0.6% to 135.850.