??Dollar Stable Despite Higher CPI; Rate Cut Uncertainty!
On Friday, the dollar remained stable against other currencies as investors assessed higher-than-anticipated U.S. consumer price inflation, contrasting with market expectations of an imminent rate cut by the Federal Reserve in March. December's consumer prices rose by 0.3%, reaching an annual increase of 3.4%, surpassing economists' forecasts. Despite this, traders are pricing in a 73.2% likelihood of a 25 basis point cut in March, signaling a disconnect between market sentiment, data, and the Fed's stance.
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The dollar index (DXY) hovered around 102.26, a slight drop from Thursday's peak of 102.76 but still well above the five-month low of 100.61 recorded in December. Cleveland Fed President Loretta Mester suggested that the recent Consumer Price Index (CPI) figures indicated it might be premature for the central bank to implement a rate cut in March. Richmond Fed President Thomas Barkin noted the data's limited contribution to clarifying the inflation path.
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Analysts expressed skepticism about a March rate cut, emphasizing the difficulty in bringing inflation back to target. The euro (EURUSD) held at $1.0977, while sterling (GBPUSD) traded at $1.277, up 0.07% for the day. The Japanese yen (USDJPY) remained stable at 145.27 per dollar, rebounding from Thursday's low of 146.41, the lowest since December 11.
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