The dollar weakened against its peers on Friday after the market entered into profit taking following the greenback’s rally on the back of an indication from the Federal Reserve that interest rates might be increased in December. The dollar had been weighed down by data which revealed that US consumer spending inched up 0.1% last month marking its lowest increase in 8 months. US consumer price index dropped by 0.1% which was its first decline since the beginning of the year. The US dollar index was down 0.38% trading at 96.99 towards Friday’s close, closing out the week down 0.23%.

The euro strengthened against the dollar with the pair trading at 1.1005 towards Friday’s close after having come off its session low of 1.0986. The euro had been bolstered by data released out of the euro zone which revealed that the area had escaped deflation territory in October. The euro zone consumer price index ticked up to a reading of zero last month following a decline of 0.1% in September. The unemployment rate for the euro zone dropped from 10.9% in August to 10.8% in September. The data lessened the need for the European Central Bank to ramp up its stimulus program.

The pound strengthened against the dollar with the pair gaining 0.76% trading at 1.5426 towards Friday’s close. The pound had been supported by predictions the Bank of England might possibly increase its key interest rate sooner than originally anticipated. The market awaits various UK PMI data to be released over the course of this week as well as the BOE’s inflation report and monetary policy statement scheduled for Thursday.

The yen strengthened against the dollar with the pair trading at lows of 120.29 before coming off to trade at 120.61 towards the end of the session. The yen had gained ground against the greenback following an announcement from the Bank of Japan to maintain its current stimulus program as is. The central bank reduced its outlook on growth and inflation which caused the market to speculate that it could expand its stimulus program at some point in December.

The Australian and New Zealand dollars strengthened against the greenback. These currencies closely linked to commodities markets were underpinned by an increase in oil prices. The Aussie gained 0.87% against the dollar with the pair trading at 0.7135 towards Friday’s close while the kiwi dollar increased 1.3% against the greenback with the pair trading at 0.6780. The kiwi dollar was supported by data which revealed that New Zealand business confidence was boosted for the second consecutive month in October.

The Canadian dollar held its ground against the greenback following the release of data which revealed that growth of Canada’s economy in August matched forecasts while discouraging US data lowered the greenback’s demand. The pair was trading at 1.3070 towards Friday’s close near its session low of 1.3063. Statistics Canada reported Canada’s GDP as having increased by 0.1% in August following an increase of 0.3% in July.

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