The US Dollar pared its gains against the Pound and fell against the Euro following the release of data which showed that inflation in the world’s largest economy increased by its biggest rate in six months.
According to the Labour Department its Consumer Price Index increased by 0.3% in December, the biggest monthly rise recorded since June. On a year by year basis inflation increased to 1.5%, higher than Novembers figure of 1.2% matching economist forecasts.
Stripping out the volatile energy and food components, the so-called core CPI rose only 0.1 percent, slowing from a 0.2 percent gain in November. That left its increase over the past 12 months at 1.7 percent, where it has now been for four consecutive months.
In a separate report, the number of US citizens claiming unemployment benefits fell by 2,000 to 326,000 in the week ending on January 11th. The figure was better than economist forecasts for a figure of 328,000. Following the release of the data some investors embarked on a bout of profit taking.
“You can make the argument that benign inflation could make room for the Fed to stay accommodative for longer. The numbers could have prompted some people to take profit. The jobs number was also positive; it shows the jobs market is gradually improving. The overall outlook of the Dollar remains positive,” said a chief market analyst.
On a less positive note was the news that the number of US citizens claiming ‘continuing’ unemployment claims went back above the three million mark in the week leading up to January 4. The highest level recorded since last July.
The figure did little to shake off the scrutiny of the US jobs market after last month’s non-farm payrolls report came in well below expectations.
Sterling could push higher if tomorrows UK retail sales data comes in strongly.
US Dollar (USD) Current Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6110 ,
US Dollar,,Euro,0.7333 ,
US Dollar,,Canadian Dollar,1.0913 ,
Pound Sterling,,US Dollar,1.6364 ,
Euro,,US Dollar,1.3635 ,
[/table]
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