The US dollar on Friday rose against the euro, but registered its fifth straight weekly loss against the common currency, after slower US consumer spending growth boosted hopes the US Federal Reserve would be less aggressive in hiking interest rates.
US consumer spending rose moderately in February after surging the prior month, and while inflation showed signs of cooling it remained elevated, which could prompt the Fed to raise interest rates once more this year.
Earlier in the session, data showed that eurozone inflation dropped by the most on record last month, but core price pressures, which exclude food and energy, accelerated, maintaining pressure on the European Central Bank (ECB) to keep raising rates.
Photo: Reuters
“Slower [US] consumer spending and cooler inflation is consistent with the view that the Fed is almost down,” said Joe Manimbo, senior market analyst at Convera in Washington.
In Europe, “core inflation accelerated to new record highs. That’s consistent with the ECB raising rates more than the Fed as we go through the balance of the year,” he said.
The US dollar index rose 0.35 percent to 102.51 points, but was down 0.59 percent for the week.
The euro fell 0.57 percent to US$1.0843 after the data. The European currency was up 0.75 percent in its fifth straight week of gains against the greenback, the longest such streak since August 2020.
The Fed is seen as about as likely to raise its benchmark overnight interest rate next month as not. Even if it does, it is expected to reverse course quickly and end the year with rates lower than it began.
“My gut feeling is that the Fed will go for another 25 basis points in May, and that will be it ... but the ECB I can see hiking aggressively still into the summer,” Stuart Cole, head macro economist at Equiti Capital, said.
“You can potentially see that being positive for EUR/USD from the interest rate perspective,” he said.
In Taipei, the New Taiwan dollar on Friday gained NT$0.007 against the US dollar to close at NT$30.454, up 0.22 percent from last week. Turnover during Friday’s session totaled US$951 million.
Additional reporting by staff writer, with CNA
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