Investing.com – The US dollar fell on Thursday, retreating from five-month highs last week ahead of key US growth data, while the Japanese yen fell to a 34-year low.
At 04:10 ET (09:10 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 105.445, after rising more than 106 last week.
The dollar will remain strong until the end of the “economic exception”
The dollar fell ahead of the release of US first-quarter data later in the session, which will show how resilient the US economy will be at the start of 2024.
The Commerce Department's reading of gross domestic product is expected to slow to 2.5% in the first three months of the year from 3.4% in the fourth quarter, a decline in growth but an indication that the United States remains stronger than other advanced economies despite a period of… Time. From persistent inflation and high interest rates.
Closely watched will be the data – the Fed's preferred measure of inflation – which is due on Friday.
Despite the recent decline, the dollar will remain king of the currency court until US “economic extremism” subsides, Macquarie said in a note Wednesday.
“Until the rest of the world starts to move beyond the US, and until the Fed sets a clearer horizon to start easing policy, we still think it will be difficult for foreign currencies to rise against the US dollar,” Macquarie said.
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The euro gives up some of the previous session's gains
In Europe, it rose 0.3% to 1.0726, rising after future forecasts showed a slight improvement in May, reaching -24.2, an improvement from the upwardly revised -27.3 seen the previous month.
This comes after the German Ifo Institute poll rose on Wednesday on business conditions and expectations for April, indicating that the euro zone's largest economy is slowly recovering.
The index rose 0.5% to 1.2521, with confidence growing after British companies recorded their fastest growth in activity in almost a year earlier this week.
The Bank of England's top officials – Governor Andrew Bailey and Deputy Governor Dave Ramsden – recently said that British inflation was falling in line with the central bank's expectations, and the risk of it remaining too high had receded, paving the way for interest rate cuts.
However, it was higher than the Bank of England's target of 2.0% in March, reaching 3.2%.
USD/JPY rises above the 155 resistance level
In Asia, it rose 0.2% to 155.67, with the pair rising to its highest level since 1990, above the widely watched 155 level.
The yen's decline against the dollar has revived expectations of currency intervention, with Japanese Finance Minister Shunichi Suzuki, along with other decision-makers, stating that they are closely monitoring currency movements and will respond as needed.
The Bank of Japan is wrapping up its latest policy policy on Friday, and is expected to keep interest rates unchanged after their historic hike in March.
The dollar rose to 7.2473, remaining close to its highest levels in five months, amid a series of aggressive reforms carried out by the People's Bank of China.
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The index rose 0.5% to 0.6529, supported by lower bets on interest rate cuts this year after the country's consumer price inflation slowed less than expected in the first quarter.
