Dollar falls after weak US data, turkey rate hike raises emerging currencies

TOKYO (Reuters) – The dollar weakened on Friday after lower-than-expected US inflation data weighed on a currency already under signs of reduced trade tensions between the United States and Japan. and China.

Emerging currencies such as the South African rand and the Mexican peso continued to rise after the sharp rise in interest rates following the sharp rise in interest rates by the Turkish central bank.

The US Consumer Price Index (CPI), the government's largest measure of inflation, increased only 0.2% in August and 0.3% of analysts in a survey. from Reuters.

The dollar also felt additional pressure as the euro won after European Central Bank President Mario Draghi suggested on Thursday at a press conference after the meeting that the weakness of the European Union's economy is likely to continue. Inflation was less worrying.

"The dollar has weakened mainly because of the weakness of the US CPI. The rebound in the euro has also weighed on the dollar, but Draghi's views can not be described as warmongers overall. There seems to have been an instinctive reaction to his comments on inflation, "said Masafumi Yamamoto, head of forex strategy at Mizuho Securities in Tokyo.

The ECB has kept its policy unchanged as planned on Thursday, staying on track to end its bond purchases this year and raise interest rates next fall.

The dollar index against a basket of six major currencies changed little to 94.563 after slipping 0.3% Thursday, while it hit 94.428, its lowest level since August 31.

The demand for safe haven for the dollar eased this week with the announcement that the White House had invited Chinese officials to resume trade negotiations. Beijing has welcomed the invitation with which both countries have said to have discussed the details.

The euro remained steady at $ 1.1691 after gaining more than 0.5% overnight when it came close to the two-week high at $ 1.101.

The Turkish lira was lower at 6.37 for a dollar after ending the day before with a gain of more than 4 percent.

The central pound jumped after the Turkish central bank raised its benchmark repo rate of one week from 625 basis points to 24% on Thursday.

After the rebound in the lira, the South African rand gained 1.3% against the dollar on Thursday and the Mexican peso rose 1%.

The Chinese yuan has barely changed at 6.8452 in offshore trading. The yuan gained nearly 0.4 percent during the week, as trade concerns between China and the United States deteriorated.

The Australian dollar, considered as an indicator of China-related trade and a barometer of risk sentiment, remained stable at 0.7191 dollars.

Aussie was heading for a 1.1% gain over the week, after falling from a 2 and a half year low to $ 0.7085 on Tuesday.

For the yuan and the Aussie, the focus was immediately on Chinese retail sales and industrial production data expected later in the session.

The dollar rose 0.1% to 112.03 yen after reaching 112.08 yen, its highest level since August 1, as the rise in equities reduced the appeal of the Japanese currency.