The dollar climbed higher against major currencies on Friday, but ended the week in the dark as traders digested inflation data and hawkish talk from Federal Reserve officials.
In late New York trade, the ICE U.S. Dollar Index (DXY), which tracks the greenback’s strength against six major currencies, was up 0.504% at 105.65.
The United States reported that import prices fell in July for the first time in seven months, mainly due to lower costs for both fuel and non-fuel products.This is the third report after the Consumer Price Index (CPI), Producer Price Index (PPI) to show that inflation may have peaked
The annual growth rate of CPI in July was lower than that of June, and the same is true for PPI. The data prompted traders to lower expectations for a 3-yard (75 basis point) rate hike by the Fed in September.
“While there is some anxiety in the market, I believe we still need to wait for more evidence that inflation has peaked, if not yet cooled,” said Amo Sahota, director of Klarity FX.
But Fed officials still vowed to raise interest rates to fight inflation, the latest to be joined by San Francisco Fed President Mary Daly, who said on Thursday she would not rule out a 3-yard hike in September.
“The Fed is rejecting a premature policy shift that would threaten any current efforts to suppress inflation,” said Joe Manimbo, senior market analyst at Convera.
Traders’ bets showed a 42.5 percent chance of a three-size rate hike from the Fed in September and a 57.5 percent chance of a two-size rate hike.
Koit Juckes, head of foreign exchange strategy at Societe Generale, said that the next dollar trend may be very volatile. “The dollar will not directly depreciate significantly, and considering that inflation is still high, the market may still re-price the endpoint of higher interest rates.”
The dollar rose 0.39% against the yen to trade at 133.495 yen per dollar on Friday.
Sterling fell 0.6% to $1.2141 per pound. The latest data showed that Britain’s gross domestic product (GDP) contracted less than market expectations in June, not dragged down by the extra national holiday.
The euro lost 0.53% to $1.02625. Inflation rose at an annual rate of 6.8% in France in July and 10.8% in Spain, the highest since 1984, data showed on Friday.
In addition, the emergency water level of the Rhine River in Germany may affect the German economy and exacerbate the energy crisis in Europe, which also leads to selling pressure on the euro.
Commerzbank has cut its forecast for the euro against the dollar, saying the euro zone’s entry into recession has changed from a “risk scenario” to a “basic scenario”. The bank predicts the euro will weaken to $0.98 by December, with a chance to recover until 2023.
The New Zealand dollar was boosted by the Bank of New Zealand’s regular meeting next week.
As of Saturday (13th) around 6:00 Taiwan time Price:
The dollar index was at 105.6905. +0.56% EUR/USD (EUR/USD) is quoted at 1 EUR = 1.0258 USD. -0.63% The British Pound to US Dollar (GBP/USD) rate is quoted at 1 GBP = 1.2130 USD. -0.55% The Australian dollar against the US dollar (AUD/USD) is quoted at 1 Australian dollar to US$0.7121. +0.28% The US dollar to Canadian dollar (USD/CAD) is quoted at 1.2772 Canadian dollars per US dollar. +0.09% USD/JPY is quoted at 133.48 yen per US dollar. +0.37%