The U.S. dollar fell on Friday morning in Asia. The greenback is on track for its first weekly decline since the start of September. The dollar retreated from a one-year high as investors focus on when the country’s central bank will start to hike interest rates.
The U.S. Dollar Index that tracks the U.S. currency against a basket of other currencies dropped 0.2% to 93.938 by 12.54 AM ET.
The index is looking a little shaky. Nonetheless, any slippage should prove modest with the Federal Reserve asset tapering now imminent, according to Westpac strategists. They also noted that any dips in the index should be limited to 93.70.
Yen, Yuan, pound, and dollar
The USD/JPY pair gained 0.27% to 113.97.
The AUD/USD pair added 0.07% to 0.7420. The NZD/USD pair advanced 0.28% to 0.7055.
The USD/CNY pair dropped 0.04% to 6.4356 while the GBP/USD pair gained 0.10% to 1.3687.
Commodity prices, bond yields, and risk sentiment influenced the safe-haven dollar. The greenback only maintained the momentum of the past five weeks against the yen, its fellow safe haven.
The dollar had rallied since early September on expectations the Fed would begin asset tapering earlier than expected. The country’s economy continues to recover from COVID-19 and energy prices continue to climb.
Minutes from the Federal Reserve’s latest meeting that took place on Wednesday is quite interesting. Policymakers said that asset tapering is likely to begin in November 2022, but policymakers remain sharply divided over inflation. Currently, money markets are pricing in about 50/50 odds of a 25-basis point rate hike by July 2022.
Traders are waiting for retail sales, the University of Michigan consumer sentiment and Michigan consumer expectations indexes. One day earlier, the data showed that the consumer price index rose 0.5% month-on-month in September. Prices increased slightly more than expected as food and energy price rises offset declines in used cars, according to the Labor Department. In September, the consumer price index for all items rose 0.4%. On a year-over-year basis, prices rose 5.4% versus the estimate for 5.3%, the highest since January 1991.
Nonetheless, excluding volatile food and energy prices, the consumer price index increased 0.2% for the month. It rose 4% year over year.
Gasoline prices increased another 1.2% for the month, bringing the annual increase to 42.1%. Fuel oil jumped 3.9%, for a 42.6% year over year surge.
Last month, food prices also showed notable gains, with food at home rising 1.2%.