By Ankur Banerjee
SINGAPORE (Reuters) - The U.S. dollar swayed on Friday, flirting with seven-month lows after a sharp dive overnight as data showed U.S. inflation was slowing, boosting hopes of the Federal Reserve taking its foot off an aggressive interest rate hike policy.
The dollar index, which measures the U.S. currency against six others, rose 0.059% to 102.220 but was languishing around its lowest level since June.
The euro was up 0.03% to $1.0849, having touched fresh nine-month high earlier in the session. Sterling was last trading at $1.221, up 0.08% on the day.
U.S consumer prices surprisingly fell for the first time in more than 2-1/2 years in December, with Federal Reserve policymakers expressing their relief and paving the way for the central bank to slow the pace of monetary tightening.
Traders of futures tied to the Fed's policy rate bet heavily on a downshift to quarter-percentage-point rises starting at the Jan. 31 to Feb. 1 meeting and a pause just below 5%, with interest rate cuts priced in for later in the year.
The U.S. central bank in December raised interest rates by 50 basis points but said it would need to keep them higher for longer to tame inflation.
"Hikes of 25 basis points will be appropriate going forward," Philadelphia Fed president Patrick Harker said in a speech to a local group in Malvern, Pennsylvania.
Carol Kong, a currency strategist at Commonwealth Bank of Australia, said the Fed would likely take comfort in the inflation report and the U.S. dollar would continue to ease.
"Even though we are likely seeing the peak in the dollar, there is still some room for the dollar to strengthen temporarily," Kong said, citing the economic slowdown anticipated around the world.
Meanwhile, the yen strengthened 0.12% to 129.10 per dollar, having touched a fresh seven-month high of 128.65 per dollar earlier in the session.
The yen has been buoyed on rising speculation that the Bank of Japan (BOJ) will review the side effects of its monetary easing at next week's policy meeting.
The Australian dollar fell 0.11% to $0.696, while the kiwi fell 0.34% to $0.637.
(Reporting by Ankur Banerjee in Singapore; Editing by Bradley Perrett)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app