The dollar strengthened against its peers on Friday as the market anticipated Federal Reserve Chair Yellen’s remarks and as US inflation data was somewhat upbeat. The US consumer price index was up by 0.1% in April matching forecasts following a 0.2% increase in March. The US core consumer price index which does not include food and energy increased 0.3% in April beating forecasts for a 0.2% gain following the same increase in March. Yellen announced that the Fed deems it necessary to raise its key interest rate ?at some point? this year if the economy falls in line with its outlook.
The euro weakened against the dollar with the pair down over 0.75% trading close to its 1.10 handle coming off highs of 1.1208 set earlier in the day. The euro had been supported by remarks from European Central Bank President Draghi who stated that the central bank’s monetary policies have facilitated economic recovery in the euro zone. However fear surrounding Greece defaulting on its loan still lingers as an agreement has yet to be reached that will secure the release of bailout funds.
The pound weakened against the dollar down over 1% trading close to its 1.55 handle. The UK Office for National Statistics released data which revealed that public sector net borrowing increased by 6.04 billion pounds in April falling short of forecasts for an increase of 7.8 billion. The pound was weaker against the euro.
The yen weakened against the dollar with the pair up over 0.5% trading above its 121 handle as US data supported the greenback. The yen had gained earlier in the session after the Bank of Japan announced that it will suspend its current monetary policy as the central bank is growing optimistic with regards to its outlook on the state of its economy.
The Australian, New Zealand and Canadian dollars weakened against the greenback. The Aussie dollar was down over 0.75% and the kiwi dollar over 0.5%. The loonie lost roughly 0.75% following the release of data which revealed that Canadian retail sales were up by 0.7% in March while experts forecast an increase of 0.3%. Core retail sales gained 0.5% in March edging out forecasts for a 0.4% rise. Canada’s consumer prices declined 0.1% in April compounding forecasts for a 0.1% increase.
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