The dollar index held around the 109 level on Thursday (16/1) after declining for three straight sessions, as signs of easing U.S. inflation strengthened expectations for further Federal Reserve interest rate cuts this year. U.S. core inflation rose 3.2% year-on-year in December, slowing from 3.3% in November, which was also the consensus forecast. On a monthly basis, the core reading fell to 0.2% from 0.3%, in line with expectations.

The inflation data led to a sharp drop in the 10-year U.S. Treasury yield, which fell about 14 basis points to around 4.65%. Market participants also expect the Fed to ease by an additional 10 basis points this year, bringing the total expected cuts to 37 basis points. However, the dollar's decline was somewhat tempered by concerns over President Trump's upcoming policy plans, particularly on tariffs, which are seen as potentially inflationary. (AL)

Source: Trading Economics