Global Currencies: dollar fluctuates with a negative bias, with Fed and data on the radar

The dollar fluctuated close to stability, on a day with a modest agenda. Investors evaluated a review of consumer price index (CPI) figures, with limited effect, and also, in Europe, inflation figures in Germany, as well as statements from directors of the main central banks, including the Federal Reserve (Fed, the North American central bank).

At the end of the afternoon in New York, the dollar fell to 149.29 yen, the euro rose to US$1.0791 and the pound rose to US$1.2634. The DXY index, which measures the dollar against a basket of strong currencies, registered a drop of 0.05%, at 104,111 points, but increased 0.18% during the week.

There were expectations for a review of the US CPI in 2023, but the changes published today were considered modest by analysts. The December CPI increased by 3.3% in the annual comparison, not 3.4% as previously reported, with a monthly increase of 0.2% (from 0.3% previously reported). There was expectation because at the beginning of 2023 the review considered changed the situation compared to the previous year, but this did not happen again. In BMO Capital's assessment, this leaves room for interest cuts in the coming months, which could come in March, May or June. On next week's agenda, there is an expectation for the US January CPI.

Among Fed leaders, Raphael Bostic, president of the Atlanta district, reiterated his commitment to the inflation target. Bostic sees recent progress, but reaffirmed that there is still a way to go to ensure price stability.

In Europe, Germany's CPI rose 2.9% in January, in the annual reading, with a monthly gain of 0.2%. Today's data confirmed the preliminaries and came in line with expectations, without influencing the euro. Among directors of the European Central Bank (ECB), Martins Kazaks warned that it is too early to cut interest rates, asking for patience before starting this process. François Villeroy de Galhau commented that the central bank will probably cut interest rates this year, without committing to a more specific date, but seeing progress in the fight to bring inflation back to the 2% target.

In Asia, the president of the Bank of Japan (BoJ), Kazuo Ueda, stated that he will still assess whether interest rates will remain negative if the inflation target is close. The Japanese government, through Finance Minister Shunichi Suzuki, in turn, said that the BoJ should remain close to the administration to conduct monetary policy.