HomeFinancial MarketsDollar Stumbles Amid Signs of Cooling Inflation

Dollar Stumbles Amid Signs of Cooling Inflation

The U.S. dollar staggered on Tuesday after the Christmas break amid signs that US inflation is cooling. Economic data showing a decline in inflation is boosting bets that the Federal Reserve will introduce interest rate cuts early next year.

Following bets that the Bank of Japan could move to tighten its monetary policy, the yen strengthened, rising 0.1% against the dollar to 142.25. The euro advanced 0.3% against the greenback to $1.1024, nearing the five-month peak of $1.1040 hit last week, while the pound sterling held steady at $1.2706.

Data released last Friday showed that U.S. prices fell in November from the previous month—the first time this has happened in over three and a half years. Annual inflation fell below 3%, approaching the Federal Reserve’s 2% target. “The Fed has made considerable progress on inflation, as core started the year closer to an annual rate of 5%, though the job is not yet done in ensuring inflation is on a sustained trajectory toward its 2% target,” Wells Fargo analysts observed in a note to investors.

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