How Yuan Benefits from Chinese Data Insights

The US dollar decreased by 0.1% against the Chinese yuan, reaching 7.1622, following inflation and trade data indicating some signs of recovery in the largest economy in Asia in December.

Inflation in the Consumer Price Index slightly increased on a monthly basis, while exports grew more than expected.

The dollar index, which tracks the US currency against a basket of six other currencies, remained steady at 102.022, down from its highest level recorded on Thursday at 102.76, but still well above its lowest level in five months at 100.61 in December.

Data released showed that consumer prices in the United States increased by 0.3% in December, with an annual increase of 3.4%, surpassing expectations for a 0.2% and 3.2% rise respectively.

However, the dollar received little support from this as the core Consumer Price Index, which excludes volatile food and energy prices, decreased again, indicating that core inflation continues to decline.

Federal Reserve officials attempted to minimize the likelihood of early interest rate cuts. Loretta Mester, President of the Federal Reserve Bank of Cleveland, stated that the latest consumer price index figures indicate that it may be premature for the central bank to lower interest rates in March.

However, the majority of traders still expect the Federal Reserve Bank to begin lowering interest rates in March.