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    Dollar lower despite strong U.S. inflation data

    The dollar slipped lower against the rest of the major currencies on Friday, as fresh falls in oil prices strengthened broadly the Japanese yen and equities emphasized concerns over the outlook for the global economy.

    The dollar found extensive support as largely upbeat U.S. data earlier in the week reinforced the view that the Federal Reserve is likely to say on a monetary tightening path this year.
    On Friday, the U.S. consumer data showed the price index rose at an annual rate of 1.4% in January, ahead of expectations for a 1.3% increase.

    Core inflation, which excludes food and energy, rose by a larger than forecast 2.2%.
    The dollar fell to one-week lows of 112.29 against the safe haven yen and USD/JPY was last at 112.66, off 0.53% for the day, despite the strong U.S. inflation data.The single currency fell to two-and-a-half year lows against the firmer yen, with EUR/JPY falling lows of 125.00, before easing back to settle at 125.36.
    However, the low yielding euro was higher against the dollar, with EUR/USD up 0.22% at 1.1130 in late trade, but the pair still ended the week down 0.83%. Thursday’s minutes of the European Central Bank’s January meeting cemented expectations for further easing next month, saying growth and inflation risks are on the rise in the euro area.

    The British pound was boosted by hopes that European Union leaders would reach an agreement to help Britain remain in the bloc, with the currency, receiving an additional boost from far stronger than expected data on U.K. retail sales for January. As a result, the pound was up 0.47% against the dollar, with GBP/USD to trade at 1.4405 late Friday.
    Elsewhere, the greenback was up against the Australian dollar, the Canadian dollar and the New Zealand dollar, due in large part to a fresh slide in oil prices.
    The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.23% to 96.62 late Friday. The index still ended the week with gains of 0.65%.

    In the week ahead, investors will be looking on today's survey data on euro zone business activity for indications on the health of the region’s economy. Also, investors will look at business sentiment in both the euro zone and the U.S. and Thursday’s report on U.S. durable goods orders for indications on the strength of the manufacturing sector.

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