WASHIGNTON: The US Dollar (USD) was on track to rise for the week on Friday, adding to solid gains so far this year, as the US economy and pushback from central bankers has caused traders to dial down expectations of swift falls in interest rates.
The euro has fallen 0.6% this week, helping push the dollar index to a 0.9% gain, taking its increase this year to 1.9%.
Japan’s yen has been the biggest loser: it is now down around 5% for the year so far as tepid economic data and a deadly earthquake have sapped confidence that the Bank of Japan is about to hike rates.
“The thumping message from U.S. activity data and central bankers is that markets are too aggressively priced for rate cuts in 2024,” said Westpac’s head of foreign exchange strategy Richard Franulovich.
“That, and a fresh bout of turbulence across China’s property and financial markets has the dollar returning to form.”
On Friday, the euro was up 0.1% at $1.0887, while the dollar index was little changed at 103.33.
The yen was also little changed at 148.02 to the dollar, having fallen after data showed Japan’s core inflation rate slowed to 2.3% in the year to December. That was its lowest annual pace since June 2022, taking the pressure off policymakers to make swift moves. “We’re kind of stuck in this range here in euro,” said Erik Nelson, macro strategist at Wells Fargo. “As much as has happened, the euro has barely moved this year.” –Agencies
