By Chuck Mikolajczak
NEW YORK (Reuters) – The dollar rose on Friday and was on track to end a two-week losing streak as investors fretted over a global computer outage that has hit banks, airlines and broadcasters, although volatility in currency markets was largely contained.
A software update by global cybersecurity firm CrowdStrike (NASDAQ:) paralyzed industries from travel to finance before services began coming back online hours after the disruption, highlighting the risks of the global shift toward interconnected digital technologies.
The dollar was on track for its second straight daily gain, and its first in two weeks, putting the greenback on track for its first weekly gain in three weeks, after recovering from recent U.S. economic data and concerns about technology disruptions.
“This may be a result of the selling pressure earlier in the week and at the end of last week, which seemed a bit overdone, especially when you consider that US economic growth remains strong and that while the Fed is set to cut rates in September, easing will remain relatively synchronised across the G10 central banks,” said Michael Brown, market analyst at Pepperstone in London.
“Of course, the previous technical issues may have sparked some flight to safety as well, causing some surprise USD buying earlier in the day, with that strength continuing into the afternoon session.”
The dollar index, which measures the greenback against a basket of currencies, rose 0.24% to 104.39 and was up 0.3% for the week.
The U.S. Federal Reserve is due to make its next policy announcement at the end of July. Markets are pricing in a slim chance of at least a 25 basis point rate cut, while they are almost entirely pricing in a rate cut at its September meeting, according to the CME’s FedWatch tool.
However, the yen rose during the week against the US dollar after suspected official buying last week by Japanese authorities, and another suspected intervention by the Bank of Japan earlier this week.
The dollar rose 0.07% against the yen to 157.48 yen during the session, swinging between gains and losses during the session after data showed inflation in Japan rose for a second straight month. The dollar fell 0.24% during the week against the Japanese currency.
The yen has fallen more than 10% against the dollar this year, largely due to the wide interest rate differential between the United States and Japan, and hit a 38-year low at the start of the month, prompting Tokyo to act.
The euro fell 0.16 percent to $1.0878 and was set to end a two-week winning streak, a day after the European Central Bank kept interest rates steady, as widely expected, and offered no hints about its next move.
Sterling fell 0.25% to $1.2909, retreating further from a one-year high hit earlier this week, after data showed UK retail sales fell more than expected in June as cold weather deterred shoppers. Sterling is down 0.6% on the week and is set to end a three-week winning streak.
In cryptocurrencies, Bitcoin rose 4.86% to $66,924.00. The cryptocurrency rose 2.79% to $3,508.90.
