Dollar Heads to Weekly Loss as Fears of Typing Diminish
By Tom Westbrook
SINGAPORE (Reuters) – The dollar hovered around recent lows on Friday and was on the verge of a slight weekly decline as traders’ concerns over discussions of the Federal Reserve’s minute cut faded, although ‘A drop in commodity prices and nerves over virus outbreaks have contained the losses. .
The dollar returned a rebound it made after a mention of possible future tapering talks, minutes before the Fed’s April meeting, sparked fears of early rate hikes.
Investors now believe that any action is still a long way off and the way may be clear again for a resumption of April’s downtrend as US trade and account deficits weigh in.
Against the euro, the dollar was stuck at $ 1.2230, not much above the four-month low of $ 1.2245 it hit earlier in the week and close to testing major support around $ 1.2345. The dollar index was held below 90 and was last at 89.777.
The index, which measures the greenback against six major currencies, is down about 0.6% for the week so far. Against the Japanese yen, the dollar held at 108.74, for a weekly loss of around 0.5%.
“It’s been just over 24 hours since the markets were scared by the prospect of the US Fed cutting back on asset purchases, but after proverbially sleeping on it the mood seems less sour,” analysts said. from ANZ in a note. “Which sounds reasonable – it’s not like the Fed is about to really want to act.”
SHADOW OF DOUBT
Persistent doubts about the Fed along with concerns about new COVID-19 outbreaks and the brakes to contain them in Malaysia, Thailand, Taiwan, Vietnam and Singapore have kept most majors stable in Asia.
Declines in commodity prices after measures to curb speculation in China weighed slightly on the Australian and New Zealand dollars exposed to exports. Each fell about 0.2%. [AUD/]
“The European reopening is a theme playing in the background, but to fear or not to fear the Fed cut is always an issue,” Bank of Singapore monetary analyst Moh Siong Sim said.
The British pound, which is heading for a third consecutive weekly gain and has climbed 2.6% in May so far, has been pinned just ahead of multi-year highs as traders await retail sales and data from the purchasing managers index expected later Friday.
April’s figures may be depressed by lockdowns, but the hope is that Britain’s reopening this week will lay a solid foundation for recovery in a population where just under three-quarters of adults have had their firsts vaccines.
The British pound last traded at $ 1.4185.
The Japanese yen has been left behind in the recent focus on inflation, tapering and future hikes. It is close to its lowest in three years at 133.02 per euro and is on the verge of suffering a fifth consecutive weekly loss against the common currency.
Against the dollar, the yen has slipped 5% since the start of the year and is the worst performing currency in the G10. It was even worse on some crosses, losing almost 10% on the Canadian dollar and almost 9% on the pound.
(Reporting by Tom Westbrook; Editing by Lincoln Feast.)