The dollar bounced back from 5 month lows against its peers on Friday as investors bought back the greenback after a sharp selloff earlier in the week. The US dollar index was up 0.3% trading at 95.07 towards Friday’s close coming off its 5 month low of 94.61 reached earlier in the session. On the week the US dollar index was down 1.09%. The dollar had stayed near 5 month lows on the back of discouraging US consumer sentiment data which revealed a decline in the index from 91.7 in February to 90.0 in March. The dollar posted losses following the Federal Reserve’s shock decision to reduce its rate increase expectations for the year from 4 down to 2 highlighting the influence of lagging global economic growth and financial market upheaval on the US economy. The market will be looking ahead to final US 4th quarter GDP data as well as US durable goods orders and home sales data to aid in determining whether the US economy is in a position to weather additional rate increased this year.
The euro weakened against the dollar with the pair trading at 1.1267 towards Friday’s close off its session low of 1.1255 after having come off its session high of 1.1336 reached earlier in the day. The euro gained over 1% on the week. The euro eased off of 5 week highs on the back of remarks from European Central Bank Chief Economist Peter Praet who indicated that interest rates for the euro zone area may decline even further.
The pound strengthened against the dollar with the pair trading at 1.4457 towards Friday’s close off its session high of 1.4514 after having come off its session low of 1.4409 reached earlier in the day. The pound rose to new 1 month highs against the dollar on the back of positive comments from the Bank of England which made light of indications that growth of the UK economy is lagging, pinpointing uncertainties in relation to the UK’s European Union membership and that the central bank is mainly focused on inflation expectations.
The yen weakened against the dollar with the pair trading at 111.52 towards Friday’s close off its session high of 111.75 after having come off its session low of 110.82 reached earlier in the day. The pair had come off 17 month lows hit in the previous session after remarks from Japanese Finance Minister Taro Aso triggered suspicions the central bank had stepped in to weaken the yen after commenting that foreign exchange market moves are closely being monitored. Meeting minutes released by the Bank of Japan revealed that the central bank proposed to widen its asset purchase program and to apply below zero interest rates to asset purchases. The dollar lost nearly 2% against the yen on the week marking its largest decline in 5 weeks.
The Australian and New Zealand dollars weakened while the Canadian dollar strengthened against the greenback. The Aussie was trading at 0.7596 against the dollar towards Friday’s close off the pair’s session low of 0.7595 after having come off the pair’s session high of 0.7680 reached earlier in the day. The kiwi dollar was trading at 0.6783 against the greenback towards Friday’s close off the pair’s session low of 0.6783 after having come off the pair’s session high of 0.6874 reached earlier in the day. The loonie had surged to 5 month highs against the greenback with the pair trading at 1.2997 towards Friday’s close off its session high of 1.3042 after having come off its session low of 1.2922 reached earlier in the day. The loonie was supported by retail sales growth data which revealed a steep increase from the previous month up 2.1% in January while experts forecast an increase of 0.4%. Canada’s consumer price index increased 0.2% in February compounding forecasts for an increase of 0.4%. The loonie was also underpinned by oil prices trading over $40 per barrel as a deal to lower production could be reached by major oil producers. The loonie closed out the week up 1.8%.
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