Investing.com – The US dollar fell on Friday, giving back some of the previous session’s strong gains, after the release of solid retail sales downplayed concerns about a looming US recession.
At 05:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 102.725, having fallen 0.4 overnight %, the largest single-day increase in four weeks. .
Jackson Hole could boost dollar sentiment
Benign inflation data this week suggests the US Federal Reserve may begin cutting rates at its next meeting in September.
But July’s stronger-than-expected release has allayed concerns that the central bank was behind the curve and would have to cut rates aggressively to avoid a recession.
This has helped the dollar recover from losses earlier in the week, even though the dollar is still on track to end the week lower.
“The data has prompted investors to move to price a 25 basis point Federal Reserve rate cut on September 18. However, a lot of data will be fed into the Fed equation and the events calendar will improve again next week,” ING analysts said in a note.
Next week’s highlight is the Federal Reserve’s annual Jackson Hole Symposium, where Chairman Jerome Powell will have a chance to steer markets ahead of the Fed’s next policy-setting meeting.
The country has kept its key overnight rate at the current range of 5.25%-5.50% since July last year, after raising the policy rate by 525 basis points since 2022.
Sterling helped by retail sales
In Europe, trading was 0.3% higher at 1.2891 after data showed Britain rose in July after a disappointing June.
Retail sales rose 0.5% in July, after falling 0.9% in June, and were 1.4% higher than a year earlier, the Office for National Statistics said.
Rates were cut for the first time in more than four years in early August, but doubts remain over whether the central bank will agree to further rate cuts this year.
traded 0.1% higher at 1.0981, rebounding after a 0.4% decline in the previous session, but still close to this week’s high of 1.1047, the highest level this year.
The yen is going higher
In Asia, it fell 0.4% to 148.75, with the pair still close to the 150 level, after falling to a low of 141 yen last week amid a slump in global risk-driven markets .
Still, the outlook for the yen appeared strong, especially as data this week showed Japan’s economy strengthening on higher wages. The strength of the economy is expected to give the Bank of Japan more room to raise interest rates further.
fell 0.1% to 7.1673, with the yuan slightly higher, although a slew of mixed economic data on China did little to improve sentiment against the yuan, nor did assurances of more stimulus from Beijing.
Attention now turns to a decision by the People’s Bank of China on its benchmark next week, after the PBOC unexpectedly cut rates in July.
