Dollar up slightly after consumer sentiment data, CPI eyed By Reuters

Written by Chuck Mikolajczak

NEW YORK (Reuters) – The dollar rose on Friday after a reading on U.S. consumer sentiment as investors sorted through a batch of comments from Federal Reserve officials, with focus beginning to shift toward key inflation readings next week.

The dollar pared its declines and turned slightly higher after the preliminary consumer confidence reading from the University of Michigan reached 67.4 for May, the lowest level in six months and below the estimate of 76.0 of economists polled by Reuters. In addition, one-year inflation expectations rose to 3.5% from 3.2%.

The dollar fell on Thursday after a higher-than-expected reading of initial jobless claims fueled expectations that the labor market is declining, in addition to other recent data that pointed to a slowdown in the economy in general.

The index, which measures the US currency against a basket of currencies, rose 0.09% to 105.31, with the euro falling 0.08% to $1.0772. The dollar is heading to achieve its first weekly gain after two consecutive weeks of decline.

Next week, investors will look to inflation readings in the form of the Consumer Price Index (CPI) and Producer Price Index (PPI), as well as retail sales data.

“I don't think the CPI will change people's minds; price pressure is still high, but it will be a decline, and it will just be a less severe reading year-on-year,” Chairman Mark Chandler said. Market strategist at Bannockburn Global Forex in New York.

“So it's not about size, it's about direction.”

The dollar was also supported by comments from Dallas Fed President Lori Logan, who said it was not clear whether monetary policy was tight enough to bring inflation down to the US central bank's 2% target, and that it was too early to cut interest rates.

That contradicts earlier comments from Atlanta Fed President Raphael Bostic, who said the Fed is likely to stay on track to cut interest rates this year even if the timing and extent of policy easing is uncertain. In addition, Chicago Fed President Austin Goolsbee said he believes U.S. monetary policy is “relatively restrictive.”

These comments came at the end of a week of mixed opinions among Federal Reserve officials on whether interest rates are high enough.

Following last week's weaker-than-expected US payrolls report and the Fed's policy announcement, markets have priced in cuts of about 50 basis points this year, with a 62.2% chance of at least a 25 basis point cut in September, according to FedWatch's own tool. With CME.

Against the Japanese yen, the dollar rose 0.26 percent to 155.86 and rose about 1.9 percent over the week against the Japanese currency after it fell 3.4 percent last week, the largest weekly percentage decline since early December 2022 after two suspected interventions from the Bank of Japan. Japan.

Japanese Finance Minister Shunichi Suzuki said Friday that the government will take appropriate action on foreign exchange if necessary, echoing recent comments by other officials.

The British pound rose 0.02% to $1.2525, after earlier reaching $1.2541, following data showing that the British economy grew the most in nearly three years in the first quarter of 2024, ending the shallow recession it entered in the second half of the year. the past.