• The dollar slumped against rivals on Friday on the back of weak factory inflation data, while the euro enjoyed solid support after the European Central Bank hinted that it could be gearing up to trim its massive monetary stimulus.
The dollar index, which tracks the greenback against a basket of six major rival currencies, edged down slightly to 91.814 .DXY. A move below the Jan. 2 low of 91.751 would put it at its weakest since Sept. 20.
Against the yen, the dollar was almost flat on the day at 111.27 JPY=, after plumbing a six-week low of 111.05 yen on Thursday.
The euro was up 0.2 percent at $1.2050 EUR=, approaching its nearly four-month high of $1.2089 set last week. It was up 0.2 percent for the week.
• A lull in noteworthy European economic data will see investors looking ahead as December’s USCPI and retail sales figures cross the wires. The headline on-year inflation rate is expected to tick gently lower, from 2.2 to 2.1 percent. Receipts are expected to add 0.5 percent from the prior month, marking a slight slowdown from the prior month but registering near the trend average.
US economic news-flow has notably deteriorated relative to consensus forecasts in recent weeks, hinting that analysts’ models may be overly optimistic and opening the door for further downside surprises. Such results might undermine the case for an interest rate hike in March, an outcome that is currently assigned an 82 percent probability by the markets. Needless to say, such a scenario will probably bode ill for the US Dollar.
• Investors took the relatively hawkish statement as a further signal that the ECB will wind down its 2.55 trillion euro ($3.07 trillion) bond purchase scheme this year if Europe’s economy continues to hum along.
• Mexico has made clear it will never pay for President Donald Trump’s planned southern border wall, the country’s economy minister said on Thursday, after the U.S. leader again insisted he would make Mexico pay for the barrier.
• The percentage of Japanese households expecting inflation to accelerate has hit a nearly two-year high, a central bank survey showed, offering some hope that economic recovery will help the Bank of Japan meet its elusive 2 percent price target.
The BOJ’s survey on people’s livelihood showed the percentage of households who expect prices to rise a year from now was 75.6 percent in December, up from 70.4 percent in September and the highest level since March 2016.
• Japan’s economy minister on Friday suggested it is possible for the government to declare an end to deflation before consumer prices reach the BOJ’s 2 percent inflation target.
• China reported a 10.8 percent rise in exports and a 18.7 percent jump in imports — both in yuan terms — for 2017.
In dollar terms, imports for the year rose 15.9 percent and exports increased 7.9 percent, the country's General Administration of Customs said Friday.
China's overall trade balance for 2017 was $422.5 billion.
China's trade data capped a robust year despite numerous concerns over the health of its economy.
• China on Friday reported a sharp drop in trade with North Korea in 2017.
The overall trade between the two countries for the year fell 10.5 percent compared to 2016.
For the month of December, the change was even more dramatic: Overall trade for that month fell 50.6 percent from the same period in 2016.
In December, China's imports from North Korea slumped 81.6 percent from a year ago, while exports to the reclusive nation fell 23.4 percent in the same period.
Recently, under heavy pressure from Washington, the world's second-largest economy has been increasingly clamping down on its historical ally. Beijing has banned domestic lenders from doing business with North Korean clients in addition to halting certain exports in compliance with international sa
• Oil prices on Friday slipped away from December-2014 highs reached the previous day.
Although analysts and traders have been warning of the risks of a downward price correction since the start of the year, they point out that overall market conditions remain strong, largely due to ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.41 a barrel at 0650 GMT - 29 cents, or 0.6 percent, below their last settlement. WTI the day before hit its strongest since late 2014 at $64.77 a barrel.
Brent crude futures LCOc1 were at $69.11 a barrel, down 15 cents, or 0.2 percent, from their last close. Brent also marked a December-2014 high the previous day, at $70.05 a barrel.
Reference: Reuters, CNBC, DailyFX
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