2023.12.2215:57:00UTC+00U.S. Dollar Down As Soft Inflation Data Supports Rate Cut Hopes

The U.S. dollar was lower against its major counterparts in the New York session on Friday, as the Federal Reserve's preferred measure of inflation slowed more than expected in November, reinforcing expectations that the Federal Reserve will begin cutting interest rates in March.

Data from the Commerce Department showed that the annual rate of consumer price growth decelerated to 2.6 percent in November from a downwardly revised 2.9 percent in October.

Economists had expected the pace of price growth to slow to 2.8 percent from the 3.0 percent originally reported for the previous month.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also slowed to 3.2 percent in November from a downwardly revised 3.4 percent in October.

Economists had expected core consumer price growth to decelerate to 3.3 percent from the 3.5 percent originally reported for the previous month.

The 10-year treasury yield fell below 3.9 percent after soft inflation data.

Fed Fund futures show a 74.2 percent chance of a 25 basis-point rate cut in March.

The greenback fell to more than 5-month lows of 0.6824 against the aussie and 0.6317 against the kiwi, from yesterday's close of 0.6801 and 0.6294, respectively. The greenback is seen finding support around 0.70 against the aussie and 0.65 against the kiwi.

The greenback declined to 4-1/2-month lows of 1.1040 against the euro and 1.3219 against the loonie, from Thursday's close of 1.1010 and 1.3281, respectively. The greenback is poised to challenge support around 1.12 against the euro and 1.29 against the loonie.

The greenback dropped to a 3-day low of 1.2744 against the pound and near a 9-year low of 0.8513 against the franc, from its previous close of 1.2689 and 0.8561, respectively. The currency may possibly face support around 1.31 against the pound and 0.84 against the franc.

The greenback eased to 141.88 against the yen, few pips short of a 1-week low of 141.86 seen in the Asian session. At yesterday's trading close, the pair was quoted at 142.10. It is likely to locate support around the 134.00 level.