Investing.com – The U.S. dollar rose in European deals on Friday but was on track for a big weekly fall after cooling inflation and weak retail sales again drew attention to Federal Reserve rate cuts.
At 04:10 ET (0810 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 104.580, slightly above a five-week low just below 104 seen earlier this week.
Dollar stabilizes after aggressive remarks from Fed
The dollar recovered somewhat after several Fed officials, particularly members of the bank’s rate-setting committee, said they needed much more confidence that inflation was falling, beyond a slight slowdown in inflation in April.
“I now believe it will take longer to reach our 2% goal than I previously thought,” St. Louis Federal Reserve President Loretta Mester said Thursday, adding that further monitoring of incoming data will be required.
Federal Reserve Bank of New York President John Williams agreed with this view.
“I don’t see any indicators right now that tell me … that there is a reason to change the stance of monetary policy now, and I don’t expect that, I don’t expect to get that much confidence that we should see going forward.” inflation is approaching the 2% target in the very near term,” Williams said.
However, the dollar remains on track for a weekly loss of about 0.7% after softer-than-expected US data raised expectations that there will be two interest rate cuts this year, likely starting From september.
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In April, the US index was also flat and softer than expected, and industrial production unexpectedly fell.
“Our view for the near term remains that we may see further stabilization in US dollar cross rates as markets await the next key data: April’s core PCE index on May 31,” ING analysts said in a note.
Euro falls ahead of consumer price index release
In Europe, trade was 0.1% lower at 1.0860, having traded to 1.0895 after US inflation data, but the single currency was still up about 0.9% against the dollar this week.
The final reading of the report will be released later in the session and is expected to show inflation rose 2.4% year on year in April.
The central bank is expected to cut interest rates in June, but traders remain unsure how many more cuts the central bank will agree to during the rest of the year.
Traders have priced in 70 basis points for the ECB’s rate cuts this year, well above just under 50 basis points. easing laid down by the Fed.
fell 0.1% to 1.2658 but is still on track to gain about 1% this week.
The Bank of England is also expected to cut rates from a 16-year high this summer, but volatility is likely to be limited ahead of the release of key UK inflation data next week.
Yen falls after weak Japanese GDP data
In Asia, the index rose 0.3% to 155.87, close to above 156, after weaker-than-expected first-quarter data from Japan.
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traded 0.1% higher at 7.2209, back to a six-month high above 7.22 after data released earlier on Friday showed growth in April was stronger than expected but growth slowed sharply, while As house price declines in China accelerated last month.