The dollar index (DXY00) Friday fell by -0.14%. The dollar Friday fell back from a 2-1/2 week high posted on overnight trade and retreated after weaker-than-expected U.S. inflation news knocked T-note yields lower. Also, strength in the yen weighed on the dollar after the yen climbed to a 1-1/2 week high after the BOJ tweaked its yield curve control program.
Friday’s U.S. economic news was mostly bearish for the dollar. Jun personal income rose +0.3% m/m, weaker than expectations of +0.5% m/m. Also, the Jun PCE core deflator, the Fed's preferred gauge of inflation, eased to +4.1% y/y from +4.6% y/y in May, better than expectations of +4.2% y/y and the slowest pace of increase in 1-3/4 years. In addition, the Q2 employment cost index rose +1.0% (q/q annualized), slower than expectations of +1.1% and the smallest pace of increase in 2 years. Finally, the University of Michigan U.S. Jul consumer sentiment was revised lower to 71.6 from the initially reported 72.6. On the positive side, Jun personal spending rose +0.5% m/m, stronger than expectations of +0.4% m/m.
