Investing.com – The U.S. dollar fell marginally on Friday while the euro also fell, poised for a sharp weekly fall amid political turmoil in the region.
At 04:20 ET (0820 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 105.125.
The dollar is declining
Despite these small losses, the dollar is on track for a slight gain this week after leaving the funds rate at 5.25%-5.5% but cutting the number of cuts it forecast this year to one from three in March. .
However, that gain is limited after both US and prices were weaker than expected, suggesting inflation pressures are easing, while jobless benefits increased to a 10-month high last week.
Even though the Fed’s June dot plot shows an average forecast of just one rate cut in 2024, Goldman Sachs continues to expect a first rate cut in September and a second cut in December.
“Our 2024 inflation forecast is now slightly below the FOMC forecast, which Chairman Powell characterized as “fairly conservative.” With the two best rounds of inflation data in hand, we believe that if the next three rounds are in a similar range, management will likely move toward a decline in September,” the US bank added.
Euro weakens due to political turmoil
fell 0.3% to 1.0708, with a weekly loss of around 0.8%, as the European region was mired in political turmoil after far-right parties made gains in European Parliament elections that ended on Sunday.
French President Emmanuel Macron responded to the losses of the right-wing National Front party led by Marie Le Pen by calling for early elections in France.
“The euro appears to have gone another step lower in early Europe today on news that French left-wing parties are coming together to form a coalition and nominate only one candidate per constituency,” ING analysts said in a report. the note. “This rare cooperation from the left could further erode support for President Macron’s party.”
France grew 2.6% year-on-year in May, slightly revised downward from preliminary 2.7% growth reported at the end of May.
The EU-harmonized annual rate in the bloc’s second-largest economy accelerated in May from April’s 2.4%.
fell 0.2% to 1.2729, heading for a slight gain this week, after stronger-than-expected UK inflation data last month prompted investors to abandon their bets on the date the Bank of England began cutting rates at the end of 2024.
The May UK release will be released next week, as will the next Bank of England report.
Yen weakens after Bank of Japan meeting
In Asia, trade was 0.3% higher at 157.56 after markets expressed disappointment over plans to tighten policy.
The Bank of Japan kept rates steady and said it would provide clear signals on its plans to start tapering bond purchases only at its July meeting, and that it would meet with market participants at that time to get more information.
rose 0.1% to 7.2557, rising to a near seven-month high, as sentiment towards China worsened due to the EU imposing high tariffs on imports of electric vehicles from China.