Dollar Slips as Inflation Cools, Yen Surges on Rate Hike Bets

U.S. inflation data impacts the dollar, slipping amid declining bond yields. Japanese yen hits a one-month high with expectations of a rate hike. The U.S. core inflation was slightly lower, leading to market respite. Currencies remain sensitive to geopolitical changes, including the upcoming Trump presidency.

On Thursday, the dollar slipped following recent high points, as cooling U.S. inflation data reduced bond yields. Meanwhile, the Japanese yen reached a one-month high due to rising expectations of a rate hike in Japan.

The yen surged by about 1%, coinciding with renewed optimism in Asia as U.S. inflation relief signaled potential Federal Reserve rate cuts. Concurrent murmurs of a Bank of Japan hike next week further strengthened the yen, which traded as firm as 155.21 per dollar. Additionally, the dollar ceded ground to the Australian and New Zealand dollars.

The euro remained steady, whereas markets showed limited reaction to a Gaza ceasefire announcement. Core U.S. inflation figures were slightly lower than expected, leading to a sense of relief among traders, though smaller currencies saw mixed responses.

(With inputs from agencies.)