The US dollar edged lower against a basket of major currencies on Friday, breaking its five-week winning streak, as global risk appetite rebounded, reducing demand for the safe-haven currency.
Global stock markets have rallied this week as fears about a stagflationary economy have been eased by forecast-beating corporate earnings in the US.
Unexpectedly strong US retail sales data for last month also boosted sentiment. Retail sales rose 0.7 percent last month, versus expectations of a 0.2 percent decline, helped in part by higher prices.
“The risk appetite here remains really, really strong for the time being,” said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management.
“That’s helping the high beta currencies like the pound, the euro and the Aussie, simply because the market is feeling much more positive,” he said.
The US dollar index firmed after the retail sales data, but then trended lower and was down 0.2 percent for the week, after appreciating for the previous five weeks.
The US dollar was last down 0.1 percent at 93.95, after having hit a one-year high of 94.563 on Tuesday.
In Taipei, the New Taiwan dollar rose against the greenback, gaining NT$0.016 to close at NT$28.027, little changed from last week’s NT$28.046.
Sterling rose 0.69 percent to US$1.3765, its highest since Sept. 17, while the euro edged up 0.02 percent to US$1.1601 after touching US$1.1624 on Thursday for the first time since Sept. 4.
The risk-sensitive Australian dollar added 0.01 percent to US$0.7416, having climbed to US$0.7439 earlier in the session. The New Zealand dollar jumped 0.42 percent to US$0.7065, extending Thursday’s 1 percent surge.
The Japanese yen was the biggest loser, dropping to as low as ¥114.46 per US dollar, its weakest since October 2018.
The yen is a safe-haven currency and has been knocked by the rebound in sentiment including in Asia.
The US dollar was last up 0.42 percent against the yen at ¥114.15.
The greenback had rallied against its major peers since early last month on expectations the US central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.
Minutes of the US Federal Reserve’s meeting last month confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.
Additional reporting by CNA, with staff writer
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