By Chuck Mikolajczak
NEW YORK (Reuters) – The dollar rose on Friday and is on track to snap a two-week losing streak as a worldwide cybersecurity outage that hit banks, airlines and shippers worried investors, although volatility in currency markets was largely contained.
A software update by global cybersecurity firm CrowdStrike (NASDAQ:) paralyzed industries from travel to finance, but services were back up and running after hours of disruption, highlighting the risks associated with the global shift to digital, connected technologies.
The dollar was on track for its second straight daily gain and first in two weeks, allowing it to post its first weekly gain in three weeks, rebounding from recent U.S. economic data and concerns about a technology equipment failure.
“Perhaps this is a result of selling pressure earlier in the week and towards the end of last week which seemed a bit over the top, particularly given that US growth remains strong and while the Federal Reserve is set to cut in September, easing will still be relatively synchronised across the G10 central banks,” said Michael Brown, market analyst at Pepperstone in London.
“Of course, earlier technical issues may have also triggered some flight to safety, prompting some impulsive dollar buying earlier in the day, and that strength continued into the afternoon session.”
The dollar index, which measures the value of the U.S. currency against a basket of currencies, rose 0.24% to 104.39 and was up 0.3% for the week.
The Federal Reserve is set to announce its next policy in slow July. Markets are expecting only a slim chance of a cut of at least 25 basis points (bps), while they are almost fully pricing in a cut at its September meeting, according to CME’s FedWatch Tool.
The yen, however, strengthened against the dollar over the week on suspicions of official purchases by Japanese authorities last week and on suspicions of further intervention by the Bank of Japan (BOJ) earlier this week.
Against the yen, the dollar rose 0.07% to 157.48 in the session, swinging between gains and losses in the session after data showed inflation in Japan rose for a second straight month. The greenback fell 0.24% on the week against the Japanese currency.
The yen has fallen more than 10% against the dollar this year, largely due to the wide interest rate differential between the U.S. and Japan. It hit a 38-year low earlier this month, prompting a reaction from Tokyo.
The euro fell 0.16% to $1.0878, poised to snap a two-week winning streak, a day after the European Central Bank kept interest rates on hold, as widely expected, and gave no indication of further action.
The pound fell 0.25% to $1.2909, retreating further from a one-year high reached earlier this week, after data showed U.K. retail sales fell more than expected in June as colder weather scared off shoppers. The pound has shed 0.6% this week and is poised to snap a three-week winning streak.
In the cryptocurrency market, bitcoin gained 4.86% to $66,924.00. It rose 2.79% to $3,508.90.
