The USD currency index underperformed after the release of the Producer Price Index (PPI) and US Retail Sales data.
At 9.30am, the US Dollar Index (DXY) was at 99.127 points, recording a small increase of 0.07% since it opened in early Asian trading on Thursday.
PPI rose 0.2%, in line with market expectations, indicating that producer price pressures are still moderate, while retail sales recorded a growth of 0.6%, exceeding expectations and reflecting the resilience of consumer demand.
The stable producer inflation data and strong retail sales are seen as supporting the US Federal Reserve's (Fed) stance to keep interest rates unchanged in the near term.
The stability of the producer-level inflation data suggests that inflationary pressures have not increased sharply. This reduces the likelihood of immediate monetary policy easing and supports the view that the Fed will keep interest rates at current levels at the January FOMC meeting.
Higher retail sales data also put pressure on expectations of a rate cut, suggesting that the consumer economy remains strong.
In the context of financial markets, the ongoing criminal investigation into Fed Chairman Jerome Powell by the US Department of Justice has also been a major focus.
The issue raises questions about the independence of major financial institutions and puts negative pressure on investor confidence in US monetary policy, which is also felt in the movements in the value of the dollar and other asset markets.
Meanwhile, market players are now awaiting the upcoming scheduled US Unemployment Claims data, which is forecast to rise above 210,000 claims. A higher reading is expected to reflect a slowdown in the labor market and could add pressure to the Fed's decision.
The report is important in assessing the direction of the US economy and provides investors with clues about the possible next Fed policy and the direction of the USD in the near term.
