Though the dollar index continued its recent winning streak, hitting a near 20-year high on Friday, the greenback later pared daily gains in New York trading to end the day slightly lower as a rally in US stocks boosted risk sentiment and this led to broad-based profit-taking on recent USD long positions.
Reuters reported that inflation needs to come down “several months” before Fed officials can confidently conclude it has peaked, Cleveland Fed President Loretta Mester said on Friday, adding she was ready to consider a faster rate hike before the Fed’s September meeting, if that’s the case. Data shows no improvement. “Inflationary risks remain strongly skewed to the upside, particularly amid the ongoing war in Ukraine and the possibility that China’s zero-COVID policy will further disrupt supply chains. I will have to see sustained downward trends for several months before concluding that inflation has peaked,” Mester said in a remark to a monetary policy forum. On the US economic front, Reuters reported that US import prices unexpectedly flattened in April as a fall in oil costs offset gains in food and other products, government data showed on Friday. The flat reading of import prices was followed by a 2.9% rise in March, the Labor Department said. In the 12 months to April, import prices rose 12.0% after accelerating 13.0% in March. Economists polled by Reuters had forecast import prices would rise 0.6% excluding tariffs.
Against the Japanese yen, the dollar rose to 129.35 in the Asian morning on active yen selling after Thursday’s sell-off to 127.53. Despite the intraday drop to 128.50 in Europe, the pair found renewed buying there and rallied alongside US yields to daily highs of 129.45 in New York on continued yen weakness.
The single currency moved narrowly in Asia after hitting a fresh 5-year low of 1.0355 on Thursday, although the rate rose to 1.0419 in early European morning, sellers emerged and tumbled in New York morning to a session low of 1.0350. The euro later recovered to 1.0415 on short covering as the rally in US stocks put the usd under pressure across the board.
The British pound rose alongside the euro to 1.2231 in early European morning before falling to a fresh 23-month low of 1.2156 in New York this morning. However, Sterling erased intraday losses and rallied to 1.2265 by close on broad based short covering in Sterling, particularly against the Euro.
Data will be released this week
New Zealand Business NZ PSI, China Manufacturing Orders, Retail Sales, Japan Machine Tool Orders, Germany Wholesale Price Index, EU Trade Balance, Canada Housing Starts, Manufacturing Sales, Wholesale Trade, US Manufacturing on Monday.
Japan Tertiary Industrial Activity, France ILO Unemployment Rate, UK Claimant Count, ILO Unemployment Rate, Employment Change, Average Weekly Earnings, Italy Trade Balance, CPI, EU Employment, GDP, US Retail Sales, Redbook, Industrial Production, Capacity Utilization, Manufacturing Performance, Business Inventories, NAHB Housing Market Index and New Zealand GDT price index on Tuesday.
New Zealand PPI, Japan GDP, Industrial Production, Capacity Utilization, Australia Westpac Leading Index, Labor Price Index, China House Price, UK CPI, RPI, PPI Input Prices, PPI Output Prices, PPI Core Output Prices, DCLG House Price, EU HICP, US MBA Mortgage Application, Building Permits, Housing Starts and Canada CPI on Wednesday.
Japanese Machinery Orders, Exports, Imports, Trade Balance, Australia Employment Change, Unemployment Rate, EU Current Account, Construction Orders, US Initial Jobless Claims, Current Jobless Claims, Philadelphia Fed Manufacturing Index, Existing Home Sales, Leading Index, Canada New Home Price Index – and producer prices on Thursday.
New Zealand Imports, Trade Balance, Exports, UK Gfk Consumer Confidence, PSNB, Retail Sales, Japan National CPI, German Producer Prices and Swiss Industrial Production on Friday.