Dollar set for weekly gain as rate cut bets ebb
Overnight May figures showed U.S. business activity accelerated to the highest level in just over two years and manufacturers reported a surge in prices for a range of inputs, prompting a pullback in U.S. .
"Traders pushed out the timing of the first to December," said economist Jameson Coombs.
Minutes from the Federal Reserve's April 30-May 1 meeting published this week also showed a live debate among policymakers as to whether current rates are sufficiently restrictive to cool inflation, again surprising investors expecting rate cuts.
The dollar's gains have kept heavy pressure on the yen, which has weakened about 0.8% through the week so far to 157.10 per dollar. The yen has also fallen on crosses and at 169.65 to the euro is not far from last months' 22-year trough at 171.44.
Japan's core inflation slowed for a second straight month in April, meeting market expectations at 2.2%.
The euro received a small boost on Thursday when key European wage indicator picked up, showing the pace of negotiated wages rose by 4.7% last quarter. That ruffled market bets on a June for Europe and helped lift the euro away from a nine-month low on the pound.
However the moves were modest and the published a blog post highlighting one-off factors contributing to the wage rise. Rates markets still price a near 90% chance the cuts rates next month.
Currency moves were modest in the early part of the Asia session and fell. started a second day of war games around Taiwan. was steady in offshore trade and eyeing a weekly drop at 7.2858 per dollar.
The U.S. dollar index, which measures the dollar against a basket of six major peers, was last up nearly 0.6% on the week to 105.07, on course for its largest one-week rise since mid-April.
Later in the day traders will have an eye on final figures, British and Canadian retail sales, U.S. durable goods orders and speeches from ECB and policymakers - notably Governor Christopher Waller on longer-term rates.
Source: Forex-Markets-Economic Times