US Dollar trades mixed ahead of data release

The US dollar was mixed against its major trading partners early Friday — up versus the European currencies, down versus the yen and Canadian dollar — before the release of December personal income, spending and price data.

Market focus will be on the Federal Reserve’s preferred inflation measures, the overall and core PCE price indexes. A further slowdown in the year-over-year rates in these series would go a long way toward confirming widespread expectations for a smaller 25 basis point rate increase at next week’s Federal Open Market Committee meeting.

The final University of Michigan sentiment index for January will be released, as well as pending home sales data for December, followed by the Kansas City Fed’s monthly services survey for January.

Federal Reserve officials remain in a quiet period until after the Jan. 31-Feb. 1 FOMC meeting. A quick summary of foreign exchange activity heading into Friday shows that EUR-USD fell to 1.0881 from 1.0891 at the Thursday US close and 1.0902 at the same time Thursday morning.

EU money supply growth slowed in December, as did the pace of loan growth to businesses, data released earlier Friday showed. The European Central Bank’s monetary policy committee meets on Feb. 2, where it is expected to increase its key interest rate by another 50 basis points.

GBP-USD fell to 1.2366 from 1.2419 at the Thursday US close and 1.2394 at the same time Thursday morning. There are no UK data on Friday’s schedule. The Bank of England’s monetary policy committee meets on Feb. 2 as well and is also expected to increase its key interest rate by 50 basis points.

USD-JPY slipped to 129.9418 from 130.2256 at the Thursday US close but remained slightly ahead of the 129.8842 level at the same time Thursday morning.

The Tokyo consumer price index, a proxy for overall Japanese consumer price data, saw accelerated year-over-year growth in January, data released overnight showed. The next Bank of Japan meeting is scheduled for March 9-10.

USD-CAD fell to 1.3317 from 1.3322 at the Thursday US close and 1.3384 at the same time Thursday morning. Canadian budget balance data for November are scheduled to be released today. After Wednesday’s Bank of Canada decision to raise its key rate by 25 basis points and then pause, the next BoC meeting is scheduled for March 8.