Soft Core PCE Inflation Data Pulls Down U.S. Dollar

(RTTNews) - The U.S. dollar dipped against its most major counterparts in the New York session on Friday, as core PCE inflation came in lower than expected in December, suggesting that the Federal Reserve is likely to start cutting rates by the summer.

Data from the Commerce Department showed that consumer prices in December were up by 2.6 percent compared to the same month a year ago, unchanged from November and in line with economist estimates.

On an annual basis, the core PCE index came in at 2.9 percent in December, down from 3.2 percent in November. Economists had expected core price growth to decelerate to 3.0 percent.

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

The report said personal spending rose by 0.3 percent in December after climbing by 0.4 percent in November. The increase in income came in line with economist estimates.

The Commerce Department also said personal spending advanced by 0.7 percent in December following an upwardly revised 0.4 percent increase in November.

Economists had expected spending to rise by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

The greenback fell to a 2-day low of 0.8616 against the franc from yesterday's close of 0.8670. The greenback is seen finding support around the 0.84 mark.

The greenback dropped to a 4-day low of 1.3414 against the loonie from Thursday's close of 1.3474. Next key support for the greenback is likely seen around the 1.31 level.

Reversing from a 1-1/2-month high of 1.0812 seen at 2:45 am ET, the greenback edged down to 1.0885 against the euro. At yesterday's close, the pair was quoted at 1.0846. The greenback is likely to face support around the 1.10 region, if it falls again.

The greenback touched a 2-day low of 1.2758 against the pound, down from a 2-day high of 1.2675 hit at 2:45 am ET. The pair had ended yesterday's trading session at 1.2706. The greenback is poised to challenge support around the 1.31 mark.

The greenback weakened to a session's low of 0.6609 against the aussie from Thursday's close of 0.6584. Should the greenback falls further, it is likely to test support around the 0.68 region.

Retreating from a 2-day high of 0.6092 seen at 4:15 am ET, the greenback declined to 0.6121 against the kiwi. At Thursday's close, the pair was valued at 0.6110. Further downtrend may take the greenback to a support around the 0.63 area.

In contrast, the greenback erased its losses against the yen and advanced to a 2-day high of 148.16. The pair had closed yesterday's deals at 147.65. The greenback may find resistance around the 151.00 level.