The euro rose after Eurozone inflation data came out in line with expectations at 0.3% year-on-year. While this headline figure was down from October’s 0.4%, markets were relieved it was not worse considering Thursday’s German and Spanish inflation numbers were weak. So the fact the overall CPI number was in line provided some relief ahead of next week’s ECB meeting as it is unlikely that today’s number will spur any ECB action. The euro bounced from a low of 1.2428 to a high of 1.2489. Meanwhile the core CPI was unchanged at 0.7% year-on-year.
The pound edged lower against the dollar after being weighed by a soft UK consumer sentiment survey which added to the recent series of negative news on the UK economy. Meanwhile a broadly stronger greenback due to falling oil prices did not help sterling which fell 0.9% from Thursday’s high of 1.5790 to today’s low of 1.5674.
The dollar extended its rally against the yen to reach a high of 118.44 by early US session trading hours. The greenback is also benefitting from a weaker yen that came under pressure today after a softer print on Japanese inflation. The October national CPI disappointed by falling to 2.9% year-on-year from a previous 3.0%. The drag to inflation will prove a concern for the Bank of Japan so the yen is expected to remain under pressure.
The US dollar is definitely reaping the benefits of lower oil prices that are hitting the commodity-linked currencies like the Canadian dollar which hit a 2-week low. Dollar/cad rallied to 1.1427 close to a 5-year high of 1.1465 hit on November 5th. Crude oil prices tumbled to as low as 67.74 on Thursday after OPEC announced its decision not to cut oil output. Oil price hovered at this 4-year low today.
With no US data out today, the currency markets will likely be quiet ahead of the weekend and ahead of a busy event-filled week – which includes nonfarm payrolls and the ECB policy meeting.