U.S. Dollar Dipped 1.4% Last Week Despite Strong January CPI Readings

The dollar had its biggest weekly loss in two years, slipping to a three-year low against several currencies on Friday.

Extending overnight losses, the dollar’s index traded as low as 88.25 on Friday morning, the lowest since December of 2014. The index was on track to lose more than 2 percent on the week, but a strong equities rally sent the index into the green in the closing hours of trading on Friday afternoon.

The USD has been weighed down by a variety of factors in the first two months of the year, including worries that the Trump administration's tax cuts may exacerbate the growing budget deficit, which is projected to increase close to $1 trillion by the end of 2019.

And despite a stronger-that-expected U.S. inflation report on Wednesday, which showed January CPI gaining 0.2% and Core CPI gaining 0.1%, the dollar failed to gain momentum as investors began to consider the possibility of additional rate-hikes by the Federal Reserve later this year.

The dollar index finished on Friday closed at 89.08 with a modest gain of 0.52 percent, but booked losses of approximately 1.4 percent for the week.

Image credit: 1