Investing.com – The US dollar rose slightly on Friday but remained under pressure after the Federal Reserve’s big rate cut, while sterling rose sharply on healthy UK retail sales.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 100.480, but remained just above a 12-month low.
Dollar struggles for buyers
The US dollar is struggling to make friends as the Federal Reserve starts a rate cut cycle with a significant cut of 50 basis points to a range of 4.75% to 5%.
Markets imply a 40% chance that the Fed will cut another 50 basis points in November and price in 73 basis points by the end of the year. Interest rates are expected to reach 2.85% at the end of 2025, which is now considered the Fed’s neutral assessment.
“But the big question for the market right now is whether the dollar is ready to break out of its two-year range,” ING analysts said in a note. “There doesn’t seem to be anything on the agenda today that could warrant a breakout, but suffice to say we’re in the camp looking for strong follow-on selling if the DXY support levels of 99.50/100 give way. ”
The pound sterling is rising this week
In Europe, it rose 0.2% to 1.3312, with the pound up more than 1% this week to reach its highest point since March 2022.
Data released earlier Friday showed Britons rose by a stronger-than-expected 1% in August and July growth was revised up to 0.7% from an earlier estimate of a 0.5% rise month -on-month.
The ECB kept its key interest rate at 5% on Thursday, after starting easing in August with a 25 basis point cut.
traded 0.1% higher at 1.1163, up almost 1% for the week and within striking distance of the August peak of 1.1201.
Last week, interest rates were cut for the second time this year, but there is some uncertainty about when the next step will be.
fell less than expected in August, declining 0.8% year-on-year, below the expected 1.0% decline.
Yen Slips After BOJ Meeting
rose 0.7% to 143.62 after yields held steady, saying it expected inflation and economic growth to rise steadily.
The BOJ’s decision and forecast came just hours after consumer price index data showed inflation rose to a 10-month high in August as higher wages boosted private consumption.
Although the yen suffered weekly losses, it still remained close to its strongest level of 2024, which was reached earlier this week.
traded 0.2% lower at 7.0538 after the People’s Bank of China left its benchmark unchanged, defying expectations that it would cut rates further to stimulate the economy.
The PBOC’s decision came at a time when a range of recent economic indicators showed continued weakness in China.
