Dollar Cruises toward 1% Weekly Fall
The U.S. dollar was little changed on Friday, remaining on course to post losses for the week, as questions about possible changes in monetary policy by the Federal Reserve lingered.
The ICE dollar index DXY -0.04% , which tracks the U.S. currency’s movement against six rivals, traded at 81.03 from 81.028 late Thursday, on its way toward a weekly decline of 1%.
The WSJ Dollar Index XX:BUXX -0.10% , which uses a slightly wider comparison basket, fell to 73.34 from 73.36, marking a 1.5% setback from a week ago.
The euro and the British pound on Friday hovered near multiweek highs against the greenback, while the Australian dollar extended gains following largely upbeat economic reports from China, Australia’s largest export market.
The dollar has remained under pressure since last Friday’s report that the U.S. economy created a less-than-expected 162,000 jobs in July. This added uncertainty as to when the Federal Reserve will start slowing the pace of asset purchases that some consider to be a weight on the value of the greenback.
The dollar didn’t find much upside support after a number of Fed officials this week said tapering of bond purchases looked likely to occur by the end of the year. The U.S. unit also declined along with U.S. Treasury yields, as the bond market ran into technical factors that have pushed yields lower.
The euro EURUSD +0.0403% on Friday slipped to $1.3377 from $1.3384 late Thursday, while the British pound GBPUSD +0.1255% inched higher to $1.5540 from Thursday’s level of $1.5537. But each currency hit highs not seen in seven weeks after a batch of encouraging European data this week, including stronger-than-expected manufacturing orders in Germany and the strongest growth in U.K. industrial production since 2010.
PMI readings and other recent sentiment indicators “currently point to a switch from negative to positive gross-domestic-product growth in the third quarter,” Handelsbanken head of macro research Jan Häggström told clients this week.
“However, growth rates for the next 2-3 years will be weaker than that expected in a normal recovery. Private-sector debt overhangs, together with weak banks and the need to consolidate public finances, will continue to hold domestic demand down,” said Häggström. “The euro zone is relying more on a global trade recovery than the U.S., and we think that a weaker euro must be part of a growth recipe for the euro zone.”
The Aussie dollar AUDUSD +0.5437% , meanwhile, hit an intraday high of 91.53 U.S. cents after China said industrial production rose 9.7% in July from a year ago, the fastest pace of growth since February. Retail-sales growth slowed slightly, to 13.2% from 13.3% in June.
The Aussie, which has been battered on expectations of further interest-rate cuts as local growth loses steam, on Thursday recaptured 91 U.S.- cents-level for the first time in two weeks after China’s trade figures for July surpassed expectations.
Against the Japanese yen, the dollar USDJPY -0.0276% bought 96.71 U.S. cents, up from ¥96.68 on Thursday. The dollar on Thursday lost grip of the ¥96 level for the first time since mid-June.
The WSJ Dollar Index XX:BUXX -0.10% , which uses a slightly wider comparison basket, fell to 73.34 from 73.56.
Source: Marketwatch
