Investing.com – The U.S. dollar steadied on Friday after falling in the previous session on weak employment data, while the pound rose on stronger-than-expected growth.
At 04:10 ET (0810 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading slightly higher at 105.115.
Dollar on track for slight gains this week
The dollar steadied on Friday and is expected to gain slightly this week after losses on Thursday following data showing a larger-than-expected rise in the weekly j index.
This evidence of a cooling US labor market has fueled some expectations that interest rates will begin to fall by September.
However, persistent inflation remains a key point of contention for the Fed, and multiple policymakers have warned about it this week, sending the dollar higher this week.
There is “considerable” uncertainty about where U.S. inflation will head in the coming months, San Francisco Federal Reserve President Mary Daly said Thursday.
“In a scenario where inflation remains… flat and simply doesn’t move forward, then it wouldn’t make sense to start adjusting rates unless we see the labor market faltering,” she added.
The comments put upcoming data due out next week into focus for more information on interest rates.
Sterling benefits from strong economic growth data
In Europe, it added 0.1% to 1.2534, recovering from its weakest level since April 24 on Thursday, after data released earlier on Friday showed the UK economy grew by its highest ever in the first quarter of 2024. for three years level.
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In the three months to March, the UK grew by 0.6%, its strongest growth since the fourth quarter of 2021, as the country’s economy emerged from the shallow recession it entered in the second half of last year.
On a monthly basis, growth in March was 0.4%, above the 0.1% growth forecast.
Interest rates held at a 16-year high on Thursday, but two of the nine members of the Monetary Policy Committee voted to cut them, suggesting the central bank is moving toward such a cut.
The pair is trading little changed at 1.0783, with the weak data calendar providing little encouragement.
The bank has all but promised a rate cut on June 6, but there is uncertainty about how many further cuts the central bank will agree to this year.
Pierre Wunsch, Belgium’s central bank governor, made the case for further steps earlier this week, saying keeping policy tight for too long now poses a greater risk than easing policy too soon.
Markets are currently pricing in a 70 basis point rate hike this year.
The USD/JPY pair is growing
In Asia, the index rose 0.2% to 155.70, trading well above the low of 152 hit earlier in May.
Traders now view the 160 level as a new intervention line for the Japanese government.
rose 0.1% to 7.2249, with the yuan weakening after reports that US President Joe Biden was considering new sanctions on some Chinese industries such as electric vehicles and batteries.
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While the economic impact of the tariffs was unclear, such measures could trigger retaliatory measures from China, further fraying ties between the world’s two largest economies.