US Dollars profit, but determined for weekly declines as Fed, Boj in Focus
The US dollar advanced on Friday, supported by a solid economic data that suggests the federal reserve is justified in taking the patient’s approach to cutting interest rates, while tariff negotiations show more clarity.
“The dollar has regained the last few days for the last two days, after being defensive at the beginning of the week … most of them are supported by a series of US economic data that is encouraging for a sustainable patience at The Fed,” said Elias Haddad, a senior market strategist at Brown Brothers Harriman in London.
The US currency, however, shows a slight reaction to data that shows new orders for capital goods produced by the US unexpectedly dropped in June while the delivery of these products increased properly. It suggests business expenditure for slowing equipment in the second quarter.
Greenback is set for the largest weekly decline in a month, in front of a more tariff dialogue and the meeting of the central bank next week, while Sterling drops after the British retail sales data is softer than expected.
Both the Fed and Bank of Japan are expected to maintain a stable tariff at the policy meeting next week, but traders focus on the next comment to measure the next movement time.
Politics is a factor for the two central banks, the most dramatic in the US, where President Donald Trump once again urges lower interest rates on Thursday when he locks the horns with Fed Chair Jerome Powell.
Brown Brothers’ Haddad said the Monetary policy of the Fed was being “overshadowed by political pressure to reduce interest rates. That is one of the reasons why I think the increase in dollars is limited.”
The dollar managed to restore a touch of Euro on Thursday night, however, after Trump said he did not intend to fire Powell, as he often suggested.
“Market assistance is based on the fact that Trump refrained from calling for Powell to leave, even though it was based on Trump’s view that Powell would ‘do the right thing’,” said Derek Halpenny, Head of Emea’s research at MUFG.
He added, however, that “the theme of Fed’s independence that was damaged by the White House could not be lost and remained a risk of decreasing dollars.”
Boj meeting
Falling against Euro and Yen leaving the dollar index, which measures the dollar to six other currencies, in 97.45, on its path with a decline
Meanwhile, in Japan, although the trade agreement signed with the US this week could make it easier for BOJ to continue the increase in interest rates, the loss of bruises for the Coalition of Prime Minister Shigeru Ishiba in the Election of the High Council on Sunday made it difficult for life for BOJ.
Yen is softer, partly thanks to Tokyo’s inflation data below, with a dollar lasted 0.5% at 147.66 yen, although on the pathway for a decline of 0.7% weekly.
The Euro fell 0.2% at $ 1,1728 but was determined for a weekly increase of 0.8%.
The general currency took support on Thursday from the European Central Bank meeting. Policy makers left the policy rate of 2%, as expected, but the bank’s assessment was relatively optimistic about the economic prospects and signed that the EU-US trade agreement approached investors to re-evaluate the previous assumptions of one more interest rate cut this year.
Conversely, British soft data supports more expectations of bank of England interest rates, and causes the results of the Euro zone bonds to rise faster than the British, supporting the euro of the pound.
Euro rose by 0.23% in Sterling to 87.27 Pence on Friday, the highest since April, built an increase of 0.44% on the previous day.
Data on Friday shows the British retail sales data for June slightly below analyst expectations, although the rebound from a sharp decline in May, after the numbers on Thursday showed business activities grew only weak in July and entrepreneurs cut the job at the fastest speed in five months.
The last pound fell 0.6% in the dollar at $ 1,3434.
Prices of Currency Offers on July 25 2:57 pm GMT
Source: Reuters (Reporting by John Square in London and Gerrtrude Chavez-Dreyfuss in New York; Additional Reporting by Ankur Barerjee in Singapore; Editing by Clarence Fernandez, Kevin Liffey, Helen Popper, Rod Nickel)
