US dollar slips after inflation data, Fed meeting looms next week

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Key Points

NEW YORK (Reuters) -The U.S. dollar inched lower on Friday, after data showed inflation rose modestly in December but was trending lower, which should keep the Federal Reserve on track to cut interest rates by the middle of the year...

Volume faded in the afternoon ahead of the weekend and as investors braced next week for a slew of important U.S. economic data such as non-farm payrolls for January and key events led by the Federal Open Market Committee meeting and the Treasurys refunding announcement..

Currency analysts at MUFG said in a note that U.S. economic data presented a mixed picture for monetary policy, ahead of the Feds next policy statement on Jan. 31.. the strong end to the year must surely place further doubt on the scope for the Fed to commence its easing cycle by March..

But March still remains feasible primarily due to the very favourable inflation data within the GDP report, the note said.. Post-inflation data, U.S. rate futures market priced in a roughly 47% chance of easing at the March meeting, down from late Thursdays 51% probability, and the 80% chance factored in two weeks ago, according to LSEGs rate probability app...

Jonathan Petersen, senior markets economist at Capital Economics wrote in a research note that despite recent solid economic data, growing disinflationary pressures have kept a lid on Treasury yields and the dollar...

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