European session review: USD mostly lower after tame U.S. inflation data, disappointing weekly jobless claims and reiteration of accommodative policy stance by Fed

USD fell against most of its major rivals in the European session on Thursday as markets assessed the tame U.S. inflation data for January, disappointing weekly jobless claims, and reiteration of Fed’s accommodative policy stance

Official data showed on Wednesday that U.S. headline CPI was up 0.3% m/m in January, while core CPI, which excludes food and energy, was unchanged m/m. On y/y basis, core CPI decelerated to 1.4% from 1.6% in December. Though the CPI data isn't the Fed's preferred inflation measure, it still signaled muted inflation pressure for consumers. However, some economists predict that it will accelerate as President Joe Biden pushes for a massive stimulus package and when consumer spending begins to ramp up after coronavirus lockdowns ease.

Yesterday, the market participants also received confirmation from the Fed's Chair Powell about the central bank's accommodative monetary policy, which should complement the additional fiscal stimulus and vaccination process needed to support the U.S. economic recovery. Powell said the U.S. labor market was a "long way" from a recovery, adding that “achieving and sustaining maximum employment will require more than supportive monetary policy.”

The Labor Department revealed on Thursday that the latest weekly initial jobless claims count totaled 793,000, which was slightly below the prior week's upwardly revised count of 812,000 (originally 779,000).  Economists had forecast a total of 757,000. The data confirmed that the U.S. labor market struggles continue.