By Saqib Iqbal Ahmed
NEW YORK (Reuters) -The dollar fell against most major currencies on Friday as traders pared gains after recent gains, but the U.S. currency remained well positioned for further progress, supported by strong U.S. economic data that prompted markets to reverse interest rate expectations. interest rate cuts.
Data on Friday showed that new orders for key US-made capital goods rebounded more than expected in April and shipments of these goods also increased, indicating that corporate spending on equipment increased at the start of the second quarter.
This follows Thursday’s data showing U.S. business activity accelerating to the highest level in just over two years in May and manufacturers reporting rising input prices.
The minutes of the Federal Reserve’s latest meeting released this week showed a lively debate among policymakers over whether current interest rates were restrictive enough to cool inflation.
The dollar fell 0.3% to 104.72 against a basket of currencies on Friday, after rising in five of the last six trading sessions. The index rose 0.2% this week.
The euro rose 0.3% late on Friday to $1.08495.
“Investors are only now taking the opportunity to look back on the week and take some profits… it’s really purely a positioning play,” said Boris Kovacevic, global market strategist at payments firm Convera in Vienna.
While stronger-than-expected US economic data has led traders to delay the timing of the Fed’s first rate cut until September, expectations for rate cuts by other central banks have also fallen.
“While Federal Reserve expectations for easing have waned over the past week, it’s a similar story for central bankers around the world – the ECB’s rate cuts have also been reversed since Monday after much official commentary,” said Helen Given. , FX trader at Monex USA in Washington.
Despite Friday’s pullback, the near-term outlook for the dollar was positive, analysts said.
“This theme of American exceptionalism is still going on,” says Convera’s Kovacevic.
The dollar is up almost 1% against the Japanese yen this week at 156.95 yen, even as Japanese government bond yields have also risen, pushing them to a decade high and passing 1% on the term of ten years. [JP/]
Japanese core inflation slowed for the second month in a row in April, meeting market expectations – remaining above the central bank’s target at 2.2%.
“It has very little impact on the yen,” said Martin Whetton, head of financial markets strategy at Westpac in Sydney. “Holding dollars is much juicier,” he said, while policymakers’ rhetoric has also made traders nervous about inflation and risk rate cuts being remote or small.
The pound rose 0.3% to $1.27365 on Friday.
Data showed wet weather hit British consumer spending much harder than expected in April, but evidence of persistent inflation and this week’s surprise announcement of the July general election kept the pound at its highest level in two months.
China began a second day of war games around Taiwan. remained stable in the offshore market around 7.2627.
The New Zealand dollar rose 0.4% to $0.61225, supported by an aggressive shift in the Reserve Bank of New Zealand’s outlook.
Among cryptocurrencies, ether was roughly flat at $3,735.90 on Friday, a day after the U.S. Securities and Exchange Commission approved applications from Nasdaq, CBOE and NYSE to list exchange-traded funds (ETFs) tied to the price of ether, potentially paving the way for the products to become commercially available later this year. This week, ether is up about 20%.
