Investing.com – The US dollar rose slightly on Friday, on track for a positive week, while the pound fell after posting weak retail sales.
At 04:10 ET (09:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 104.065, recovering from a nearly four-month low to price for first weekly gain in three.
Dollar has provided a safe haven
The dollar recovered from recent lows as U.S. labor and manufacturing data increased uncertainty about when the Federal Reserve would cut interest rates.
The US currency has also seen demand as a safe haven as US-China relations weaken and uncertainty over the US presidential race grows, amid calls for President Joe Biden to drop his re-election bid.
“If President Biden were to step aside, there is a scenario where the dollar could move slightly lower as Democrats would have a better chance of retaining the Senate and we would be looking at a ‘Trump Constrained’ scenario” , he said. analysts at ING in a note.
Sterling is retreating from recent highs
was trading 0.2% lower at 1.2914, moving lower after rising to a one-year high earlier this week.
Britain fell 1.2% in June, against an estimated decline of 0.4%, indicating that British consumers were hurt by high interest rates.
Combined with recent data showing slowing wage growth in Britain and inflation around the Bank of England’s 2% target, expectations for a cut in August have risen to 43%, up from around 39% on Thursday.
fell 0.2% to 1.0878, falling further from Wednesday’s four-month high after holding rates steady at Thursday’s meeting.
“Market expectations for interest rate developments seem quite reasonable to me at the moment,” ECB policymaker Francois Villeroy de Galhau said in an interview on French radio BFM Business on Friday, when asked whether he agreed with the expectations of a possible reduction in September. and another in December.
The markets are almost expecting two ECB interest rate cuts for the rest of the year.
The yen falls after CPI data
In Asia, inflation fell 0.1% to 157.29 after Japanese inflation for June was softer than expected, raising uncertainty over whether the Bank of Japan will have enough room to raise rates further during a meeting later this month.
The pair had fallen to around 155 earlier this week, prompting speculation that the Japanese government had intervened in the currency markets.
rose 0.1% to 7.2674, with the pair close to the level last seen in November 2023.
The yuan took a hit on recent reports that the US is considering tougher trade sanctions on China’s technology and chip manufacturing sectors – a move that could trigger retaliation from Beijing.
