Dollar Up, But Near Four Week Lows Thanks to Fed’s Dovish Tone By Investing.com

Dollar Up, But Near Four Week Lows Thanks to Fed’s Dovish Tone By Investing.com


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By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia but was set for a fourth consecutive week of losses, as the U.S. Federal Reserve sticks to its dovish monetary policy.

The that tracks the greenback against a basket of other currencies inched up 0.03% to 90.618 by 12:26 AM ET (4:26 AM GMT).

The pair inched down 0.10% to 108.81. Japanese data released earlier in the day said increased 2.2% month-on-month in March, while the contracted 0.2% year-on-year in April.

The pair was up 0.24% to 0.7782, with Australia’s Producer Price Index rising 0.2% , and 0.4% , in the first quarter of 2021. The pair edged up 0.11% to 0.7253.

The pair inched down 0.04% to 6.4684. China’s for April was 51.1, while the was 54.9. The for April was 51.9 and the is due in the following week.

The pair inched up 0.08% to 1.3951.

The dollar index (DXY) is set to end the week with a 0.2% loss, and a 2.8% loss for the month. The greenback’s losses were its Canadian counterpart’s gains, with the latter climbing to a more-than-three-year high against the U.S. dollar on Friday.

Investors are still digesting the Fed’s latest policy decision, handed down on Wednesday. Although Fed Chairman Jerome Powell acknowledged the U.S. economy’s growth, he added that there was not yet enough evidence of “substantial further progress” toward recovery to justify a change in policy.

Optimism that signs of economic recovery, particularly in the labor market, could force the Fed into tapering its asset purchases earlier than expected, drove DXY to a five-month high in March 2021.

“DXY may attempt a rebound in coming days as expectations turn to potentially blockbuster April payrolls next week, but gains will prove short-lived with Fed officials to underscore Powell’s resolutely dovish stance,” Westpac strategists said in a note.

The gauge is likely to drop below 90 in the near term, from 90.6 currently, but the “DXY’s depreciation trend is likely more of an ongoing grind than a wholesale sharp setback,” the note added.

Data released on Thursday said that the U.S. rose 6.4% quarter-on-quarter in the first quarter of 2021 and 553,000 were filed over the past week.

The Fed’s stance contrasts with that of its northern neighbor. The Bank of Canada has already begun tapering its asset purchases, and the commodity-linked Canadian dollar got a further boost from rising oil prices, which were at a six-week high.

The prices also boosted the Australian and New Zealand dollars, which are also linked to commodities.

In cryptocurrencies, ether was just below a record high of $2,800.89 set on Thursday, driven by media reports about the European Investment Bank’s plans to launch a “digital bond” sale on the ethereum blockchain network.

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