© Reuters.
Investing.com – The US dollar fell in early European hours on Friday, consolidating after strong gains for the previous session, as traders nervous ahead of next week’s Federal Reserve meeting.
At 03:00 ET (07:00 GMT), the greenback, which measures the greenback against a basket of six other currencies, was trading 0.1% lower at 100,480, after rising 0.5% overnight.
The index is on track for gains of about 1% this week, rebounding from a 15-month low earlier in the week.
The dollar was boosted by strong employment data
The dollar got a boost on Thursday after data showed that the number of Americans filing for unemployment benefits fell unexpectedly last week, suggesting that the US labor market remains tight.
It is widely expected to raise interest rates by another 25 basis points next week, but the central bank’s next move remains uncertain, and odds of another hike rose after the data.
However, traders seem unwilling to commit aggressively ahead of the meeting, with Fed policymakers now in a blackout period.
Sterling gains after strong retail sales in the UK
It rose 0.2% to 1.2891, after Britons rose 0.7% m/m in June, more than the expected rise of 0.2%. This is still 1.0% lower than a year earlier but beat expectations for a 1.5% decline.
“Retail sales grew strongly, as food sales rebounded from the effects of the additional bank holiday, supported in part by good weather, and department stores and furniture stores also had a strong month,” said Grant Fitzner, chief economist at ONS.
euro edges are higher; European Central Bank to raise next week
It rose 0.1% to 1.1139, rebounding from a 0.6% drop on Thursday as the dollar appreciated.
It is expected to raise interest rates by 25 basis points next week, and traders will be looking for guidance on future policy as a number of policymakers sounded more dovish ahead of the blackout period.
Japanese inflation remains above target
It rose 0.1% to 140.17 after data showed Japan rose 3.3% in June from a year earlier, staying above the Bank of Japan’s 2% target.
Policy is expected to hold steady next week, including the yield control scheme, but it may revise inflation expectations for this year, pointing to future tightening.
Elsewhere, it fell 0.1% to 7.1680, following reports that the country’s largest state-owned banks had intervened in currency markets to support the yuan.