The US dollar gave up gains from early on Friday as traders tidied positions ahead of the end of the month and a holiday weekend after seeing new economic data confirm expectations about US inflation and the recovery from the COVID-19 pandemic.
The US dollar index of major currencies rose as much as 0.4 percent during the day in a sharp rebound from four-and-a-half-month lows plumbed on Tuesday before it fell back to flat for the day and the week at 89.99.
Ending with little change was a break from the downtrend since March that had taken 3 percent from the US dollar’s value as other major economies began to catch up with vaccination rates in the US.
At the same time, central banks in some other countries had appeared likely to move more quickly than the US Federal Reserve to back away from easy money policies and let interest rates rise.
The euro was up a bare 0.05 percent at US$1.22 on Friday afternoon, compared with a four-month high of US$1.2266 earlier in the week.
The British pound was flat at US$1.4199, continuing its recent struggle to stay above US$1.42.
In Taipei, the New Taiwan dollar rose against the greenback, rising NT$0.055 to close at NT$27.767, up 0.6 percent for the week.
The US and the UK have public holidays tomorrow.
The US economic data had been seen as the big scheduled news of the week, but it did not move bond and stock markets much when it was released in the morning.
The data showed that consumer prices last month increased far beyond the US Federal Reserve’s 2 percent annual rate target.
The inflation readings had been widely anticipated and were not expected to have an impact on policy from the Fed, which has viewed recent price increases as adjustments for the reopening of the economy.
The next big event for the markets is the Fed’s monetary policy meeting on June 15 and 16, which could provide clues to when US interest rates would increase.
Fed officials could show projections for stronger economic growth. That would point toward the central bank tapering its purchases of bonds and allowing longer-term interest rates to rise, which would support the US dollar, FXStreet.com senior analyst Joseph Trevisani said.
“The Fed is trying to prepare the markets for the inevitability of tapering,” Trevisani said.
The major currency that would most likely lose against the US dollar is the Japanese yen, Trevisani said, citing trouble with Japan’s recovery from the pandemic, compared with Europe and the UK.
The US dollar gained against the yen early on Friday and hit a seven-week high before easing to show little change on the day. The US dollar last traded around ￥109.77 after reaching as high as ￥110.2.
China’s onshore yuan appreciated to as few as 6.358 per dollar, a three-year high. The US dollar was last trading at 6.3616 yuan, down 0.15 percent for the day.
Additional reporting by CNA, with staff writer
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