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FOREX-Dollar falls to a minimum of almost nine months against the euro due to inflation data in the US

(Updates with afternoon quotes in New York)

By John McCrank

NEW YORK, Jan 12 (Reuters) – The US dollar fell to nearly nine-month lows against the euro on Thursday, after U.S. inflation data indicated prices were on a sustained downward trend, raising prices. expectations that the Federal Reserve will be less aggressive with rate hikes.

* Data showed that in December prices fell unexpectedly for the first time in more than two and a half years.

* The consumer price index (CPI) fell 0.1% last month, marking the first decline since May 2020, when the economy was reeling from the first wave of COVID-19 infections.

* Economists polled by Reuters had forecast no change in the CPI.

* Price pressures are easing as the US central bank’s fastest monetary-tightening cycle since the 1980s dampens demand and bottlenecks in supply chains ease.

* “Three months of relatively subdued core inflation numbers are starting to form a trend … that could prompt the Federal Reserve to further slow the pace of tightening on February 1,” said Sal Guatieri, chief economist at BMO Capital Markets.

* The euro continues to find support in hardline messages from European Central Bank officials, four of whom on Wednesday called for further rate hikes.

* The dollar came to lose 1% against the euro, its lowest level since April 21. It was then trading 0.83% lower at $1.0845 by 2000 GMT and 0.56% against the pound at $1.22195.

* The dollar index fell 0.815% to 102.20 units, its lowest level since June 6.

* The greenback hit a 6-1/2-month low against the Japanese yen, which had been boosted by a Yomiuri report saying the Bank of Japan will review the side effects of its monetary easing at the Bank of Japan meeting. next week and could take further steps to correct distortions in the yield curve.

(Reporting by Rae Wee Editing in Spanish by Ricardo Figueroa)

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