Investing.com - The dollar fell to its lowest level since October against a basket of the other major currencies on Friday after weak U.S. inflation and retail sales data added to doubts over the Federal Reserve’s plans to raise interest rates again this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.69% to 94.9 late Friday, its lowest trough since October 5.
U.S. consumer price inflation slowed to 1.6% in June from 1.9% in May, the Labor Department said on Friday.
Consumer spending was also weaker than expected, with retail sales falling 0.2% in June, compared to expectations of a 0.1% rise.
The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year but the sluggish inflation outlook has raised questions over whether officials will be able to stick to their planned tightening path.
In testimony before Congress on Wednesday, Fed Chair Janet Yellen said the economy is on a strong enough footing for the Fed to raise rates and begin winding down its massive bond portfolio.
However she also reiterated that inflation is below target and noted that it is a particular “uncertainty” that could affect monetary policy.
The dollar was weaker against the yen, with USD/JPY down 0.65% at 112.53 late Friday, after falling to a two-week low of 112.28 earlier.
The euro gained ground, with EUR/USD advancing 0.62% to 1.1469, closing in on the 14-month high of 1.1488 set on Wednesday.
Sterling was also higher, with GBP/USD up 1.24% at 1.3099 after hitting 1.3114 earlier, its highest since September, 2016.
The Australian dollar surged to an almost 15-month high, with AUD/USD jumping 1.28% to 0.7829 in risk-on trade as global stock markets hit record highs.
The New Zealand dollar was also higher, with NZD/USD adding 0.33% to trade at 0.7346.
In the week ahead, investors will be turning their attention to the outcome of Thursday’s European Central Bank meeting for fresh clues on when the central bank will shift away from its ultra-easy policy.
Monday’s data on Chinese second quarter growth will also be closely watched along with inflation data out of the UK.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 17
Financial markets in Japan will be closed for a holiday.
China is to release data on gross domestic product, industrial production and business investment.
The euro zone is to release revised data on consumer inflation.
Canada is to report on foreign securities purchases.