After robust economic data reduced bets for aggressive Federal Reserve interest rate cuts, the dollar traded close to a one-week high against major peers on Friday, on track to end a five-week losing streak.
As the case for easing by the European Central Bank was strengthened by cooling inflation in Germany and Spain, the euro remained close to a two-week low against the dollar.
The yen held close the firmly watched 145 for each dollar level subsequent to debilitating on Thursday, as the greenback followed an ascent in U.S. Depository yields.
On Friday, data showing that core consumer prices in Tokyo increased by 2.4% in August, more than the Bank of Japan’s target of 2%, was largely ignored by the Japanese yen. However, a measure that excludes energy costs only increased by 1.6%.
GDP grew at an annualized rate of 3.0% in the second quarter, up from the 2.8% rate reported last month, according to overnight U.S. data. According to Reuters’ poll of economists, GDP would not be revised.
Rodrigo Catril, senior FX strategist at National Australia Bank, said, “That’s been the market mover from the price action overnight, particularly when you look at currencies and U.S. Treasury yields.” He was referring to the GDP reading.
He went on to say, “The takeaway there – the highlight – is that the consumer was stronger than had been thought.” The superiority of the U.S. was as yet apparent in Q2.”
According to the FedWatch Tool of the CME Group, traders now favor a quarter-point Fed rate reduction on Sept. 18, laying only 34% odds of a 50-basis point (bp) cut, down from 38% a day earlier.
As of 0505 GMT, the U.S. dollar index, which compares the currency to a basket of six major peers, was little changed at 101.40, after rising 0.36 percent on Thursday to its highest level since August 22 at 101.58.
It is on track for its best week since the beginning of April, which would be a gain of 0.7 percent this week. Its worst month since November, however, is anticipated to occur in August, when it is expected to decrease by approximately 2.5 percent.
After rising as high as 145.55 overnight for the first time since August 23, the dollar fell 0.13 percent to 144.80 yen.
The euro remained unchanged at $1.10755 on Thursday, falling as low as $1.10555. Later in the day, additional consumer inflation readings from France, Italy, and the euro area as a whole are due.
The US likewise sees the arrival of the center individual utilization consumptions (PCE) cost record, the Federal Reserve’s favored expansion check.
After falling to $1.3146 overnight for the first time since August 23, sterling was steady at $1.3165.
With recent data indicating that there is less need for imminent rate cuts, the Australian and New Zealand dollars remained close to their highest levels this year.
After reaching its highest level since January 2 at $0.6824 a day earlier, the Australian dollar continued to gain support from this week’s hotter-than-expected consumer price data, resulting in a slight increase to $0.68015. On Friday, retail sales data showed an unexpected slowdown, but the currency ignored it.
New Zealand’s kiwi added 0.08% to $0.6262, in the wake of coming to $0.6298 on Thursday interestingly since Jan. 2. After business confidence soared to its highest level in a decade the day before, a survey of consumers conducted on Friday revealed a rebound from the deep lows of August.
On Friday, corporate demand for the Chinese currency increased as expectations for U.S. rate cuts increased, propelling the yuan to a two-month high and its biggest monthly rise since November.
The spot yuan reached a high of 7.0895 dollars per yuan before last changing hands at 7.0913, on track for a 2% increase in August.
“Temporarily, we can’t preclude the chance of a ‘charge’ for money change” that could support the yuan above 7.0 per dollar, China Worldwide Capital Corp (CICC) said in a note.
