NEW YORK/LONDON- The dollar eased on Friday as it headed for a fourth week of gains while traders reduced their bets on how quickly the Bank of Japan might raise interest rates and how soon the Federal Reserve will cut them.
Traders shrugged off revised US monthly consumer prices thatrose less than initially estimated in December. While underlying inflation remained a bit warm, the mixed picture did not alter the market’s outlook on the timing of Fed rate cuts.
The annual revisions published by the Labor Department also showed the consumer price index (CPI) increasing slightly more than previously reported in October and November.
“The revisions aren’t going to make the Fed cut rates,” said Steven Ricchiuto, US chief economist at Mizuho Securities USA LLC in New York.
“The market’s in a rush, (but) the Fed is sitting there saying we’re not in a rush. Actually, things are really pretty good from their perspective,” he said.
The dollar index fell 0.07 percent to 104.04, while the euro was up 0.08 percent to $1.0785.
The widely anticipated revisions are more for economists and are too small to matter to the market, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“We’ve had a big move this week and I think they were just consolidating in the FX market,” he said. “The market last year got too aggressive about how far the Fed’s going to cut and when they’re going to begin.”
Fed officials this week again signaled the US central bank has no pressing need to cut rates. The message gave the dollar an extra tailwind that pushed the yen to a 10-week low as traders reduced bets on how quickly the Bank of Japan (BOJ) might raise rates. -Reuters
