Investing.com – The U.S. dollar fell from last week’s five-month highs on Thursday ahead of key U.S. economic growth data, while the Japanese yen fell to a 34-year low.
At 04:10 ET (0910 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% lower at 105.445, having risen well above 106 last week.
The dollar will remain strong until the end of the “economic exceptionalism”
The dollar fell ahead of the release of US first-quarter data later in the session, which will show how resilient the US economy was at the start of 2024.
Gross domestic product growth slowed to 2.5% in the first three months of the year from 3.4% in the fourth quarter, according to the Commerce Department, a decline in the growth rate but an indication that the U.S. remains more resilient than other countries developed economies, despite a period of severe inflation and elevated interest rates.
The data – the Fed’s preferred inflation gauge – due out on Friday will be watched more closely.
Despite the recent decline, the dollar will remain king of the currency board until US “economic exceptionalism” cools, Macquarie said in a note on Wednesday.
“Until the rest of the world begins to outperform the US and until the Fed sets a clearer horizon for when to begin easing policy, we continue to believe the currency will struggle to rise against the US dollar,” Macquarie said.
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The euro returns some of the gains from the previous session
In Europe, the index rose 0.3% to 1.0726 after forecasts showed a slight improvement in May to -24.2, an improvement from the upwardly revised -27.3 seen in the previous month .
It follows gains on Wednesday in Germany’s Ifo Institute’s survey of business conditions and expectations for April, suggesting the eurozone’s largest economy is slowly recovering.
rose 0.5% to 1.2521, with confidence rising after UK businesses recorded their fastest rise in activity in almost a year earlier this week.
Senior Bank of England officials – Governor Andrew Bailey and Deputy Governor Dave Ramsden – recently said British inflation was falling in line with the central bank’s forecasts and the risk of it being stuck too high had receded, paving the way for a rate cut.
However, in March this rate was higher than the Bank of England’s target of 2.0%, amounting to 3.2%.
USD/JPY soars above resistance 155
In Asia, the pair rose 0.2% to 155.67, with the pair rising to its highest level since 1990, above the widely watched 155 level.
The yen’s fall against the dollar has revived expectations of currency intervention, with Japanese Finance Minister Shunichi Suzuki and other policymakers saying they were closely monitoring the currency’s movements and would respond as needed.
The Bank of Japan finalizes its latest policy on Friday and is expected to keep rates unchanged after a historic hike in March.
The index rose to 7.2473, remaining close to a five-month high, amid a series of strong corrections by the People’s Bank of China.
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rose 0.5% to 0.6529, helped by year-over-year rate cuts after the country’s consumer price inflation slowed less than expected in the first quarter.