Dollar Sheds Ground Against Major Counterparts

(RTTNews) - The U.S. dollar turned in a weak performance against its major rivals on Friday on bets the Federal Reserve will likely cut interest rate in September after a reading of the nation's consumer price inflation came in line with estimates.

Data from the Commerce Department showed consumer prices in the U.S. increased in line with economist estimates in the month of April, while core consumer prices edged up by slightly less than expected.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.3% for the third straight month in April, matching economist estimates.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2% in April after rising by 0.3% in March. Economists had expected another 0.3% increase.

The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7% and 2.8%, respectively. The readings matched expectations.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending.

The Commerce Department said real personal spending, which excludes price changes, edged down by 0.1% in April after climbing by 0.4% in March.

Chicago-area business activity unexpectedly contracted at an accelerated rate in the month of May, according to a report released by MNI Indicators. MNI Indicators said its Chicago business barometer fell to 35.4 in May from 37.9 in April, with a reading below 50 indicating contraction. Economists had expected the business barometer to rise to 41.0.

The dollar index dropped to 104.36 after the release of the PCE data, but recovered to 104.62 as the day progressed, trimming its loss to less than 0.1%.

Against the Euro, the dollar weakened to 1.0849, and against Pound Sterling, it eased to 1.2743.

The dollar strengthened against the Japanese currency, fetching 157.26 yen a unit. The Aussie firmed against the greenback, trading at US$ 0.6654. The Swiss franc gained marginally against the dollar at CHF 0.9023. The Loonie firmed to 1.3627 a unit of the U.S. currency.