[Click eStock] "Dollar Falls Amid Inflation Easing"

The US dollar fell on easing inflation concerns.

Kiwoom Securities analyzed on the 16th that while the Japanese yen showed strength due to expectations of additional interest rate hikes, the US dollar weakened as the US core consumer price index (CPI) for December fell short of market expectations and Treasury yields declined.

The US December consumer price inflation rate rose 2.9% year-on-year, up from 2.7% the previous month, but the core CPI increased 3.2% year-on-year, below market expectations. The overall decline in US Treasury yields acted as a factor weakening the dollar.

The Japanese yen strengthened against the dollar as expectations for additional rate hikes at the January BOJ meeting increased following remarks by the Bank of Japan Governor that further rate hikes are possible if economic and inflation improvements continue.

International oil prices rose despite news of a ceasefire agreement between Israel and Hamas. This was influenced by the US Energy Information Administration (EIA) reporting a decrease of 1.96 million barrels in US crude oil inventories last week, continuing the downward trend, along with reports of some pipeline operations being halted in the US due to gasoline leaks. Additionally, following the Biden administration's sanctions on Russia, countries that actively imported Russian crude are expected to increase oil imports from other regions to replace it, which also contributed to the rise in oil prices. Meanwhile, gold prices increased as the US December consumer price index was released in line with market expectations, easing concerns about the Federal Reserve's monetary policy.

Government bond yields closed higher. Amid caution over the upcoming US consumer price index release and the Bank of Korea's Monetary Policy Committee meeting, foreign investors' net selling of futures led to an overall weak close. Although the dollar-won exchange rate fell slightly as domestic political uncertainty eased, the impact on the bond market was limited. Regarding the strong performance of the 30-year government bond, the Ministry of Economy and Finance mentioned it is monitoring the situation, and the 30-year bond, which had shown strength during the session, turned slightly weaker.

US Treasury yields closed sharply lower. The US December core consumer price index fell short of expectations, causing yields, which had risen amid inflation concerns, to drop significantly. The US December core inflation rose 3.2% year-on-year and 0.2% month-on-month, both below market expectations and the previous month’s figures. Expectations that the US Federal Reserve's rate-cutting cycle has not ended led to the decline in yields.