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U.S. CPI posts smallest annual rise since October 2021
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Euro rises to two-week high vs dollar
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Fed funds futures price in rate rises in March, May
By Gertrude Chavez-Dreyfuss NEW YORK, Feb 14 (Reuters) -
The dollar fell to a roughly two-week low on Tuesday after data showed consumer prices rose in January but posted their smallest annual rise since October 2021, affirming expectations the Federal Reserve may be nearing the end of its monetary policy tightening cycle.
The U.S. currency briefly rose after the release of the data, but fell across the board a few minutes later.
The Labor Department's Consumer Price Index increased 0.5% last month after gaining 0.1% in December, data showed. Monthly inflation was boosted in part by rising gasoline prices, which increased 3.6% in January. But in the 12 months through January, the CPI grew 6.4%, the smallest gain in about 1-1/2 years, and followed a 6.5% rise in December. The annual CPI peaked at 9.1% in June, which was the biggest increase since November 1981. In early trading, the dollar index fell 0.2% to 102.93 . It dropped as low as 102.50, its weakest level since Feb. 3. Against the yen, the dollar slipped 0.1% to 132.34 .
The euro gained 0.3% to $1.0754 , hitting a roughly two-week high of $1.0805 after the data.
"The narrative remains unchanged that the Fed will eventually slow down," said Adam Sarhan, chief executive officer at 50 Park Investments in New York.
"It is: raising rates, stop raising rates and then possibly cut rates down the road in the future and avoid a hard landing, completing their goal of a soft landing."
Futures
tied to the Fed's policy rate stuck to bets on Tuesday that the U.S. central bank will raise interest
rates at least two more times. The futures contracts pricing showed traders are betting heavily that the Fed
will raise rates by a quarter of a percentage point at each of its meetings in March and May.
The current target range for the Fed's benchmark overnight interest rate is 4.50%-4.75%.
======================================================== Currency bid prices at 9:12AM (1412 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change
Session
Dollar index 103.1200 103.2100 -0.07% -0.358% +103.2600 +102.5000
Euro/Dollar $1.0743 $1.0725 +0.17% +0.26% +$1.0805 +$1.0720
Dollar/Yen 132.5250 132.4100 +0.08% +1.07% +132.8600 +131.5000
Euro/Yen 142.37 141.98 +0.27% +1.48% +142.4900 +141.5300
Dollar/Swiss 0.9190 0.9197 -0.03% -0.57% +0.9201 +0.9139
Sterling/Dollar $1.2178 $1.2141 +0.30% +0.70% +$1.2268 +$1.2135
Dollar/Canadian 1.3346 1.3333 +0.07% -1.53% +1.3363 +1.3273
Aussie/Dollar $0.6967 $0.6966 +0.00% +2.19% +$0.7029 +$0.6936
Euro/Swiss 0.9873 0.9858 +0.15% -0.22% +0.9889 +0.9849
Euro/Sterling 0.8820 0.8831 -0.12% -0.27% +0.8848 +0.8804
NZ $0.6326 $0.6359 -0.48% -0.33% +$0.6389 +$0.6300
Dollar/Dollar
Dollar/Norway 10.1480 10.0985 +0.20% +3.10% +10.1510 +10.0630
Euro/Norway 10.9054 10.8191 +0.80% +3.92% +10.9099 +10.8186
Dollar/Sweden 10.3319 10.3733 -0.25% -0.73% +10.3802 +10.2495
Euro/Sweden 11.0995 11.1274 -0.25% -0.45% +11.1364 +11.0630
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Shristi Achar A in Bengalaru; Editing by Ed
Osmond and Paul Simao)
