Author: Saqib Iqbal Ahmed
NEW YORK (Reuters) – The dollar fell against most major currencies on Friday as investors posted gains after recent gains, but the U.S. currency remains well positioned for further gains, supported by robust U.S. economic data that prompted markets to trim expectations for interest rates reductions in interest rates.
Friday’s data showed that fresh orders for key U.S.-made capital goods rose more than expected in April, and shipments of those goods also rose, suggesting a pick-up in corporate spending on equipment at the start of the second quarter.
It comes after Thursday’s data showed U.S. business activity accelerated to its highest level in just over two years in May, with manufacturers reporting piercing increases in input prices.
Minutes from the Federal Reserve’s latest meeting released this week showed heated debate among policymakers over whether current interest rates are tight enough to frosty inflation.
The dollar fell 0.3% to 104.72 against a basket of currencies on Friday, after rising in five of the last six trading sessions. During the week, the index increased by 0.2%.
Late Friday, the euro rose 0.3% to $1.08495.
“Investors are just taking the opportunity to take stock of the past week and take some profits… it’s really just a positioning game,” said Boris Kovacevic, global market strategist at payments firm Convera in Vienna.
While better-than-expected U.S. economic data prompted investors to postpone the Fed’s first rate cut to September, expectations for rate cuts by other central banks also declined.
“While expectations for Federal Reserve monetary easing have eased over the past week, it is a similar story for central bankers around the world, with developments in ECB rate cuts also moderating following a range of official comments since Monday,” Helen Give said. , currency trader at Monex USA in Washington, DC.
Analysts say that despite Friday’s rebound, the near-term outlook for the dollar is sanguine.
“The theme of US exceptionalism is still relevant,” said Convery’s Kovacevic.
The dollar rose almost 1% against the Japanese yen this week, to 156.95 yen, even as Japanese government bond yields also rose, hitting a decade high and reaching 1% on a 10-year maturity. [JP/]
Core inflation in Japan fell for the second month in a row in April, meeting market expectations and remaining above the central bank’s target of 2.2%.
“It has very little impact on the yen,” said Martin Whetton, head of financial markets strategy at Westpac in Sydney. “It makes much more sense to hold dollars,” he said, while policymaker rhetoric has also made traders concerned about inflation and risk rate cuts would be distant or tiny.
On Friday, the pound rose 0.3% to $1.27365.
Data showed moist weather hit UK consumer spending much more than expected in April, but evidence of persistent inflation and this week’s surprise announcement of the July general election kept sterling near two-month highs.
China has started the second day of the war games around Taiwan. remained on the offshore market around 7.2627.
The New Zealand dollar rose 0.4% to $0.61225, helped by a hawkish change in outlook from the Reserve Bank of New Zealand.
Among cryptocurrencies, the price of ether was roughly steady at $3,735.90 on Friday, a day after the U.S. Securities and Exchange Commission approved applications by Nasdaq, CBOE and NYSE to create a list of ether price-linked ETFs, potentially paving the way for products could enter the market this year. Ether is up about 20% in a week.
