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by On a quiet holiday Tuesday, the dollar index was around 101.6. This is near its five-month low. The reason is the cooling of US inflation. This strengthens the prediction that the Federal Reserve will reduce interest rates next year.
Key data points include:
- The core PCE index, the Federal Reserve’s favorite inflation measure, dropped to 3.2% in November. This is down from 3.4% in October and lower than the predicted 3.3%.
- Data from Thursday showed that US economic growth in the third quarter was less than expected.
- There was a slight rise in unemployment benefit claims in the most recent period.
The dollar is trading near multi-month lows against other major currencies. It may depreciate further against the yen. BOJ Governor Kazuo Ueda said on Monday that the chance of reaching the 2% inflation target is “gradually rising.”
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