Dollar index remains at multi-year highs, boosted by UoM report

Investing.com –

Investing.com – The dollar remained broadly supported near 12-year highs against the other major currencies on Friday, after data showing that U.S. consumer sentiment jumped to the highest level in 11 years in January overshadowed earlier U.S. industrial production and inflation data.

In a preliminary report, the University of Michigan said that its consumer sentiment index rose to 98.2 this month, the highest level since January 2004, from 93.6 in December, compared to expectations for a rise to 94.1.

The UoM’s inflation expectations for the next 12 months ticked down to 2.4% in January from 2.8% in December.

A separate report showed that U.S. consumer price inflation fell 0.4% last month, in line with expectations and after a 0.3% decline in November.

Core CPI, which excludes food and energy, was flat in December, compared to expectations for a 0.1% rise, after a 0.1% uptick the previous month.

Data also showed that U.S. industrial production slipped 0.1% in December, confounding expectations for a 0.1% rise, after an increase of 1.3% in November.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.82% to 93.07, very close to Thursday’s fresh 12-year peaks of 93.30.

USD/CHF advanced 2.02% to 0.8580, off lows of 0.7360 hit on Thursday, while EUR/CHF rallied 1.30% to trade at 0.9902, off the previous session’s lows of 0.8204.

The Swiss National Bank shocked markets on Thursday by scrapping the 1.20 per euro exchange rate floor it imposed in September 2011, in a bid to stave off deflation and prevent the continued appreciation of the safe-haven franc.

The central bank also cut rates to minus 0.75%, from minus 0.25% and lowered its target range for the three-month Libor to minus 1.25% to minus 0.25%, from minus 0.75% to 0.25%.

EUR/USD hit fresh 11-year lows of 1.1522 and was last at 1.1525, down 0.93% for the day.

The euro was hit after official data earlier showed that consumer price inflation in the euro zone fell 0.1% in December, in line with market expectations, after a 0.2% decline in November.

The bloc’s CPI rose at an annualized rate of 0.2% last month, unchanged from November.

Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, rose 0.4% in December, after a 0.1% downtick the previous month.

The data fuelled further concerns over persistently low levels of inflation in the euro area. The European Central Bank targets an inflation rate of close to, but just below 2%.

The dollar climbed higher against the safe-haven yen, with USD/JPY up 0.87% to 117.15, off one-month lows of 115.85 hit overnight, while GBP/USD slid 0.32% to 1.5132.

The commodity-linked currencies remained broadly weaker. AUD/USD shed 0.38% to 0.8182 and NZD/USD declined 0.66% to trade at 0.7772. USD/CAD hit fresh five-year highs of 1.2046 before retracing to 1.2016, up 0.51% for the day.

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