The U.S dollar edged higher amid cautious positioning among investors amid the major events. The US Dollar Index (DX-Y.NYB) rose by 0.14 points to 98.49 at press time. The strengthening of the dollar is attributed to a mixed reaction after the release of U.S Consumer Price Index (CPI) data, and monetary policy announcements from the Bank of Japan (BOJ), European Central Bank (ECB), and Bank of England (BOE).
The U.S consumer price index released today by the Bureau of Labor Statistics showed a softer than expected 2.7% annualized rate last month, contrary to the anticipated 3%. The stocks surged as the data turned out to be cooler than anticipated. The Dow Jones Industrial Average closed at 47,951.85, 65.88 points up, while the S&P 500 (^GSPC) is trading at 6,831.75, +1.25 points up at press time. The NASDAQ is trading at 25,301.50, up by +39.75 points.
The softer-than-expected CPI data has raised hopes regarding future Fed rate cuts. The U.S. Treasury yield is likely to go down. The US dollar and dollar-denominated assets may weaken while making riskier assets more attractive.
Earlier caution ahead of the U.S. November Inflation data made the dollar stronger. The delayed data is crucial to get insights about the state of inflation in the country. According to the Bureau of Labor Statistics, ‘will not include 1-month percent changes for November 2025 where the October 2025 data are missing’. The October inflation data release was scrapped as the prolonged U.S government shutdown has obstructed the data collection.
FTSE 100 & Stocks Rise Amid the Interest Rate Cut by the Bank of England
EUR/USD slipped to 1.1720 at the time of writing this article. The Bank of England (BOE) announced an interest rate cut of 3.75% from 4%. The move was anticipated as the country is struggling with a high unemployment rate, and inflation remains largely under control. According to the latest data, the unemployment rate is 5.1%, but inflation in November eased from 3.6% to 3.2%.
On the other hand, the European Central Bank (ECB) held interest rates steady as the region’s inflation remained around 2%. The investors are closely watching for the ECB President Christine Lagarde’s press conference following the decision. The press briefing would give the direction of the monetary policy in the upcoming year.
Dollar Strengthens as BOJ Raises Interest Rate to 30 Year High
The Bank of Japan (BOJ) raised interest rates to 30 year high on Friday. BOJ’s 25 bps hike is meant to bring inflation under control. The country’s inflation remains above the mandated 2%. According to the latest data, the inflation rate is 2.9%.
Yen is anticipated to strengthen against the dollar following the announcement. Yet, currently, USD/JPY is at 155.9050, 0.3750 up. The investors are worried about the global liquidity as the hike makes borrowing costlier.
