The dollar retreated against major currencies on Thursday after the release of data that showed a less-than-expected increase in inflation in the United States and the British pound rose following the Bank of England's (Central) decision to cut interest rates.
Data from the U.S. Labor Department showed that the Consumer Price Index rose by 2.7% annually in November, compared to expectations of 3.1% according to a Reuters survey of economists.
The dollar declined 0.12% to 155.48 against the yen, and fell 0.16% to 0.794 against the Swiss franc.
The longest government shutdown in U.S. history affected the collection of data needed for the inflation report. The Federal Reserve Board (the U.S. central bank) relies on the Personal Consumption Expenditures Price Index as the benchmark related to the inflation rate targeted by the bank at 2%.
On Wednesday, U.S. President Donald Trump said that the next Federal Reserve Chairman would be someone who strongly believes in "substantially" lowering interest rates.
All known candidates for the position, including White House economic adviser Kevin Hassett, former Fed member Kevin Warsh, and current board member Chris Waller, call for lowering interest rates from their current levels.
The euro stabilized amid volatile trading after the European Central Bank decided to keep interest rates unchanged, expressing a more optimistic outlook on the Eurozone economy, which has shown resilience against global trade shocks.
The euro fell 0.01% to $1.173.
The dollar index, which measures the performance of the dollar against a basket of major currencies including the yen and euro, decreased 0.04% to 98.329.
The British pound rose after the Bank of England cut interest rates for the fourth time this year. Markets postponed their expectations for the next rate cut to June, instead of April as previously expected before the latest decision.
The British pound increased 0.29% to $1.3414.
The central banks of Sweden and Norway kept their main interest rates unchanged, in line with expectations. The Swedish krona was at 10.9074 to the euro, and the Norwegian krone fell 0.33% to 11.9313 to the euro.
The Bank of Japan (Central) is likely to raise short-term interest rates on Friday from 0.5% to 0.75%, as rising food costs keep inflation above the central bank's target rate of 2%.
