December’s U.S. consumer price index rose 6.5 percent year-on-year. Compared to November, it was 0.6 percentage points lower. In month-on-month terms, prices in the US even fell by 0.1 percent.
Dollar goes against the direction of inflation
However, the US dollar surprisingly reacted to the relatively favourable news on inflation in the United States by weakening. It fell 0.83% against the euro, 0.6% against the British pound and around 2.5% against the Japanese yen.
Will the Fed Slow Rate Hikes?
Although the decline in inflation means hope for a reversal of the trend, from the point of view of the dollar market, this is not very optimistic information. The likelihood that the Federal Reserve will slow interest rate hikes at its next monetary policy meeting has increased significantly. Dollar investments will slightly lose their attractiveness.