Investing.com – The U.S. dollar fell lower on Thursday, retreating from last week’s five-month highs ahead of the release of key U.S. growth data, while the Japanese yen fell to a 34-year low.
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% lower at 105.445, after rising well above 106 last week.
Dollar remains strong until end of ‘economic exceptionalism’
The dollar has fallen ahead of the release of first-quarter US data later in the session, which will show how resilient the US economy was in early 2024.
The Commerce Department’s gross domestic product figures are slowing from 3.4% in the fourth quarter to 2.5% in the first three months of the year. This is a decline in growth, but an indication that the US remains more robust than other advanced economies despite a period of economic growth. of persistent inflation and high interest rates.
The numbers – the Fed’s favorite inflation gauge – due Friday will be more closely watched.
Despite the recent slippage, the dollar will remain king of the currency playground until US “economic exceptionalism” cools, Macquarie said in a note on Wednesday.
“Until the rest of the world starts to outpace the US, and until the Fed sets a clearer horizon for the start of policy easing, we continue to believe it will be difficult for the currency to recover against the USD,” he said. Macquarie.
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The Euro gives back some of the gains from the previous session
In Europe, yields rose 0.3% to 1.0726, up after May’s forward-looking data showed a small improvement to -24.2, an improvement from the upwardly revised -27.3 of the previous month.
This follows Wednesday’s rise in the German Ifo Institute’s survey of the business environment and expectations for April, suggesting the eurozone’s largest economy is slowly recovering.
rose 0.5% to 1.2521, with confidence rising after British companies recorded their fastest growth in activity in almost a year earlier this week.
Senior BoE officials – Governor Andrew Bailey and Deputy Governor Dave Ramsden – recently said that UK inflation was falling in line with the central bank’s forecasts and that the risk of it remaining too high had declined, paving the way cleared for an interest rate cut.
That said, yields were above the BoE’s target of 2.0% in March, standing at 3.2%.
USD/JPY rises above the resistance at 155
In Asia, it rose 0.2% to 155.67, with the pair climbing to its highest level since 1990, above the much-watched 155 level.
The yen’s decline against the dollar has revived expectations of currency intervention, with Japanese Finance Minister Shunichi Suzuki, along with other policymakers, stating that they are closely monitoring currency movements and will intervene if necessary comment.
The Bank of Japan finalized its latest policy decision on Friday and is expected to leave interest rates unchanged after a historic rate hike in March.
rose to 7.2473 and remained close to a five-month high amid a series of strong corrections by the People’s Bank of China.
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rose 0.5% to 0.6529, supported by declining expectations of interest rate cuts since this year after consumer price inflation in the country slowed less than expected in the first quarter.
