WASHINGTON: The dollar traded flat and the euro weakened on Friday after a higher-than-expected Thursday readout of US consumer prices that amped up investor expectations of interest rate hikes.
Comments from St. Louis Federal Reserve President James Bullard on Thursday unleashed a wave of bets on aggressive rate increases after the Labor Department said that in the 12 months through January, the CPI jumped 7.5% - the biggest year-on-year increase since February 1982.
Bullard told Bloomberg he’d like to see 100 basis points of hikes by July, adding that he had become “dramatically” more hawkish.
That shot the dollar into choppy trading early Friday as the greenback initially posted gains as well as an eight-day high, but struggled to choose a direction and eventually traded lower.
Meanwhile the euro, which surged last week, was set for a weekly decline after European Central Bank President Christine Lagarde said in an interview that raising rates now would not bring down record euro zone inflation but only hurt the economy. The dollar index fell 0.095%, with the euro down 0.23% to $1.1401.
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