The US Dollar finally broke course and ended an 11-day win streak today, retreating versus the Japanese Yen and the common currency Euro. The US Dollar Index was also lower after earlier touching on its highest monthly price just yesterday. Despite upbeat inflation data and a positive outlook from the Federal Reserve Chair Janet Yellen, analysts put the blame for the Dollar’s decline on the latest economic data which disappointed investors and dampened sentiment. It was reported late yesterday that, on a month-over-month basis, US industrial output unexpectedly fell to -0.3 in January against expectations of a fall to 0.1% which was itself well off December’s 0.8%.
As reported at 10:29 am (GMT) in London, the USD/JPY was trading at 113.605 Yen, down 0.55%; the pair earlier hit a session trough of 113.5500 Yen while the peak was set at 114.3300 Yen. The EUR/USD was up 0.35% to trade at $1.0635, not far from the session high of $1.0641 while the low was set at $1.0591.
Fed Still Has Tightening Outlook
Yesterday, William Dudley, President of the New York City branch of the Federal Reserve Bank, reinforced the Fed’s cautious optimism for gradual rate hikes over the coming months, provided that neither the incumbent President Trump or the US Congress derails those plans. Analysts say that the Dollar’s surge after the November election were largely based on expectations that Trump would increase infrastructure spending and offer tax reforms. The Dollar’s recent struggles have been due to growing concern over this administration’s protectionist stance and hints that a weaker Dollar is preferred.