US Dollar extends decline as inflation data stokes hope of a soft landing



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US Dollar extends decline as inflation data stokes hope of a soft landing

On Friday, US Dollar fell across the board against a number of major and emerging market currencies, as latest US inflation data had stoked hopes of a less hawkish stance from the US Fed, which could eventually help stem a soft landing when it comes to an impending recession.

Heavyweight US lender Goldman Sachs forecasted later last month that the US economy would enter into a recession by early-2023. Nevertheless, Friday’s mass-scale decline in US Dollar was almost entirely catalysed by the latest US CPI (Consumer Price Index) data.

Earlier on Thursday, Government data had unveiled that US Consumer Price Index rose by 7.7 per cent last month on a year-on-year basis, stoking hopes that the US Fed might begin to ease its monetary policy on its December policy meet while prodding a mass-scale Dollar sell-off frenzy.

US Dollar tumbles after soft inflation data

Citing statistics, on Friday’s FX market wind-down, US Dollar Index (DXY) measured against a basket of six major currencies on an average toppled as much as 1.7 per cent, while the bloc’s common currency euro shared among 19 member states gained 1.46 per cent to $1.036.

British Pound jumped 1.22 per cent to $1.1853 against its American peer, while safe-haven asset Swiss Franc advanced 2.4 per cent to $0.9402 against the American currency. Besides, risk-sensitive Australian Dollar and Kiwis progressed 1.4 per cent and 1.6 per cent respectively.

Meanwhile, addressing that the market might have witnessed the peak of US Dollar with US Fed seeking to ease its monetary policy, a chief market strategist at Bannockburn Global FX in New York, Mark Chandler said, “It's not just short term trend-followers, momentum players having to get out of positions, but some long-term structural long dollar positions have to be unwound”.