Dollar Loses Ground Against Major Rivals As PCE Data Raises Rate Cut Prospects

(RTTNews) - The U.S. dollar shed its value against its major counterparts on Friday after data showing a slower than expected increase in the Federal Reserve's preferred measure of inflation raise hopes the central bank will start cutting interest rates early next year.

Data from the Commerce Department said the annual rate of consumer price growth decelerated to 2.6% in November from a downwardly revised 2.9% in October. Economists had expected the pace of price growth to slow to 2.8% from the 3% originally reported for the previous month.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also slowed to 3.2% in November from a downwardly revised 3.4% in October. Economists had expected core consumer price growth to decelerate to 3.3% from the 3.5% originally reported for the previous month.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending.

The bigger than expected slowdown in consumer price growth has added to optimism the Fed is poised to pivot to cutting interest rates early next year.

The dollar index, which dropped to 101.43 earlier in the day, recovered to 101.71 later on, but still remained below the unchanged line.

Against the Euro, the dollar was down slightly at 1.1014, recovering from 1.1042 against a unit of the European currency. The dollar weakened to 1.2702 against Pound Sterling, and against the Japanese currency, it firmed to 142.51 yen.

The dollar was up slightly against the Aussie at 0.6800 after having weakened to 0.6826 earlier. Against Swiss franc, the dollar was down marginally at CHF 0.8558, and against Loonie, the dollar was weak at C$ 1.3268.