Dollar Index Slips Amidst Economic Data, Yen Strength

(RTTNews) - The U.S. dollar declined against major currencies during the week ended February 13 amidst a softening in consumer price inflation that renewed expectations of monetary easing by the Federal Reserve. The strong payrolls data as well as the yen's strength in the wake of Japanese Prime Minister Sanae Takaichi's landslide election victory however limited the greenback's losses.

The U.S. dollar inter alia declined against the euro, the British pound, the Australian dollar, the Japanese yen, the Canadian dollar, the Swedish krona as well as the Swiss franc. As a result, the Dollar Index which measures the Dollar's strength against a basket of 6 currencies also dropped more than half a percent.

During the past week, the Dollar Index traded between the weekly high of 97.76 recorded on Monday and the weekly low of 96.49 on Wednesday.

Data released by the U.S. Census Bureau on Tuesday showed retail sales unexpectedly stalling in December, versus an increase of 0.6 percent November, missing market forecasts for a 0.4 percent gain.

Data released by the U.S. Bureau of Labor Statistics on Wednesday showed an addition of 130 thousand jobs to payrolls in January, versus 48 thousand in the previous month and market expectations of 70 thousand. The unemployment rate which was expected to remain steady at 4.4 percent however declined to 4.3 percent.

Data released by the U.S. Bureau of Labor Statistics on Friday showed annual headline inflation at 2.4 percent in January, declining from 2.7 percent in December and falling below market expectations of 2.5 percent. The core component thereof declined to 2.5 percent from 2.6 percent in the previous month in line with expectations. Headline inflation on a month-on-month basis which was expected to remain steady at 0.3 percent unexpectedly declined to 0.2 percent. The core component thereof increased from 0.2 percent to 0.3 percent as expected by markets.

Amid the data deluge as well as the yen's strength, the dollar index eventually closed the week's trading at 96.92, implying a decline of 0.73 percent from the level of 97.63 on February 6.

Amid the dollar's weakness, the EUR/USD pair rallied 0.44 percent during the week ended February 13. From the weekly low of 1.1809 touched on Monday, the pair climbed to a high of 1.1929 on Tuesday. The pair eventually closed the week at 1.1869, versus 1.1817 a week earlier.

The British pound also gained against the greenback during the week ended February 13. The GBP/USD pair which had closed at 1.3613 on February 6 gained 0.26 percent during the week ended February 13 to close at 1.3649. The weekly trading range was wider, between a low of 1.3585 recorded on Monday and a high of 1.3714 recorded on Wednesday. Data released on Thursday had shown the U.K. economy expanding by 1 percent year-on-year in the fourth quarter of 2025, slowing from 1.2 percent in the previous quarter and missing market expectations of a growth of 1.2 percent.

The Australian Dollar jumped 0.83 percent against the U.S. Dollar during the past week, as markets focused on inflation concerns as well as the impact of Reserve Bank of Australia's quarter percentage rate hike earlier this month. The AUD/USD pair surged from the level of 0.7017 recorded on February 6 to close the week ended February 13 at 0.7075. During the week, the pair oscillated between a low of 0.7006 recorded on Monday and the high of 0.7149 recorded on Thursday. Data released on Monday had shown Australia's Westpac-Melbourne Institute Consumer Sentiment Index dropping 2.6 percent month-on-month in February to a ten-month low.

The U.S. Dollar declined against the Japanese Yen also during the week ended February 13 as markets priced in the growing monetary policy divergence between Bank of Japan and the Federal Reserve. The USD/JPY pair closed the week at 152.70 versus 157.21 a week earlier, registering a decline of 2.87 percent. The pair oscillated heavily during the week, recording the week's high of 157.74 on Monday and the week's low of 152.26 on Thursday as the yen recorded the best week in nearly 15 weeks.

Ahead of the release of the FOMC minutes on Wednesday and the PCE-based inflation readings on Friday, the Dollar Index has strengthened further. The Dollar Index is currently at 97.13 compared with 96.92 on Friday.

The EUR/USD pair is currently at 1.1846 versus 1.1869 on Friday. The GBP/USD pair is currently trading near 1.3592 versus 1.3649 on Friday. The AUD/USD pair is currently at 0.7071. The pair had closed at 0.7075 on Friday.

Data released earlier in the week showed Japan's GDP growing 0.1 percent quarter-on-quarter in the fourth quarter of 2025 missing market forecasts of a 0.4 percent increase. As the yen weakened in response, the USD/JPY pair is now at 153.04 as compared with the level of 152.70 recorded at the end of the previous week.