© Reuters
Investing.com – The US dollar rallied in early European trading hours on Friday, rebounding from 15-month lows as traders factored in the end of the Fed’s rate hike cycle as inflation subsided.
At 02:55 ET (06:55 GMT), which measures the greenback against a basket of six other currencies, it was trading 0.2% higher at 99.620, after falling below the 100 level for the first time since April 2022.
The dollar’s worst weekly performance in eight months
However, despite these gains, the dollar fell around 2.5% this week, its worst weekly performance in eight months, weighed down by lower-than-expected US inflation data – on Wednesday and Thursday – that support the Fed’s views. Approaching the end of the interest rate hike cycle.
“In recent months we have been expecting clear signs of easing US inflation – and dollar weakness – in the third quarter of 2013 and … (these) moves could be the beginning of an important market adjustment,” ING analysts said in a note. .
Markets are still widely expecting a 25 basis point rally from late this month, but another rally this year is no longer the case.
next second quarter earnings season
The second-quarter earnings season could also give the Fed to ponder regarding any additional hikes, as executives make statements about current business and consumer demand and expectations for the rest of the year.
Major banks are due to begin their quarterly reporting season later this session, and traders will be looking for any signs of instability in the wake of the turmoil earlier in the spring.
The euro retreated from a 16-month high
It fell 0.2% to 1.1207, after touching a fresh 16-month high of 1.1244 in Asian hours before retreating.
It fell 2.9% year-on-year in June, more than expected. This is usually a leading indicator of consumer price inflation, and the sharp drop in the ECB would be pleased given that it remains so high.
It fell 0.3% to 1.3096 after breaking above 1.30 on Thursday for the first time since April 2022, while it rose 0.2% to 138.3 as the yen moved to its best week against the dollar since January.
It fell 0.3% to 0.6869 amid some uncertainty over monetary policy after the government appointed Reserve Bank Deputy Governor Michelle Bullock as the new central bank governor, the first woman to be appointed to the post.
It fell 0.3% to 7.1303, near a one-month high after a series of stronger-than-expected midpoint reforms by the People’s Bank of China.