Saqib Iqbal Ahmed
NEW YORK (Reuters) – The dollar fell against most major currencies on Friday as traders took profits after recent gains, but the U.S. currency remains well positioned for further gains, helped by strong U.S. economic data that energized markets lower interest rate expectations. rate reduction.
Data on Friday showed that new orders for key capital goods made in the U.S. rose more than expected in April and shipments of those goods also increased, suggesting higher business equipment spending early in the second quarter.
It follows data Thursday that showed U.S. business activity accelerated in May to its highest level in just over two years, with manufacturers reporting higher commodity prices.
Minutes from the Federal Reserve’s latest meeting released this week showed lively debate among policymakers over whether current rates are 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. Over the week, the index increased by 0.2%.
The euro was up 0.3% at $1.08495 late Friday.
“Investors are just now taking the opportunity to wrap up the week and take some profits… it’s really just a positional play,” said Boris Kovacevic, global market strategist at payments firm Convera in Vienna.
While stronger-than-expected U.S. economic data prompted traders to push back the Fed’s first rate cut to September, expectations for rate cuts from other central banks also dropped.
“While expectations for Federal Reserve policy easing have cooled over the past week, it is a similar story for central banks around the world, with changes in ECB rate cuts also easing following a flurry of official comments since Monday,” Helen Given said. , currency trader at Monex USA in Washington.
Despite Friday’s decline, the dollar’s near-term outlook was optimistic, analysts said.
“The theme of U.S. exceptionalism is still very much alive,” Convera’s Kovacevic said.
The dollar rose nearly 1% against the Japanese yen this week to 156.95 yen, although Japanese government bond yields also rose, hitting 10-year highs and rising 1% on 10-year maturities. [JP/]
Core inflation in Japan slowed for the second month in a row in April, meeting market expectations and remaining above the central bank’s target of 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 more profitable,” he said, while rhetoric from politicians also had traders nervous about inflation and a decline in risk rates would be distant or small.
On Friday, the pound rose 0.3% to $1.27365.
Data showed wet weather in April hit UK consumer spending much harder than expected, but evidence of persistent inflation and a surprise announcement this week of a general election in July kept sterling near two-month highs.
China began the second day of military exercises around Taiwan. held steady in the offshore market around 7.2627.
The New Zealand dollar rose 0.4% to $0.61225, helped by a change in the Reserve Bank of New Zealand’s forecast.
Among cryptocurrencies, the price of ether on Friday, a day after the US Securities and Exchange Commission approved applications from Nasdaq, CBOE and NYSE to list exchange-traded funds (ETFs) linked to the price of ether, was around $3,735.90. potentially paving the way for the products to begin selling later this year. Over the week, ether grew by about 20%.