Investing.com – The US dollar fell slightly on Friday, while the euro also fell, heading for a sharp weekly loss amid political turmoil in the region.
At 04:20 EDT (08:20 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 105.125.
Dollar edges lower
Despite these small losses, the dollar is on track for small gains this week after it left the funds rate unchanged at 5.25%-5.5%, but reduced the number of cuts expected this year to just one, from three in March.
However, these gains were limited after US prices and prices came in weaker than expected, indicating easing inflationary pressures, while unemployment benefits rose to their highest level in 10 months last week.
Although the Fed's June chart shows an average expectation of just one rate cut in 2024, Goldman Sachs still expects a first rate cut in September and a second cut in December.
“Our inflation forecast for 2024 is now slightly below the FOMC forecast, which Chairman Powell described as ‘fairly conservative.’” The US bank added: “With two better rounds of inflation data now available, we believe that if the next three rounds “In a similar range, the leadership is likely to push for a cut in September.”
The euro is weakening due to political turmoil
The index fell 0.3% to 1.0708, on its way to record weekly losses of about 0.8% as the European region was plunged into political turmoil after far-right parties made gains in the European Parliament elections, which concluded on Sunday.
French President Emmanuel Macron responded to the losses suffered by the right-wing National Front party led by Marie Le Pen, by calling for early elections in France.
“The euro appears to be heading lower again early in Europe today on news that French left-wing parties are working together to form a coalition and are only fielding one candidate per region between them,” analysts at ING said. note. “This rare cooperation from the left would absorb more support from President Macron’s party.”
In France, it rose 2.6% year-on-year in May, which was a slight decline from the initial reading of a 2.7% increase published in late May.
The pace of EU alignment accelerated year-on-year in the bloc's second-largest economy in May compared to April's reading of 2.4%.
The index fell 0.2% to 1.2729, heading for small gains this week, after stronger-than-expected inflation data last month in Britain prompted investors to back off their bets on when the Bank of England will start interest rate cuts in late 2024.
The UK May release is due next week, as is the upcoming Bank of England release.
Yen weakens after Bank of Japan meeting
In Asia, trading rose 0.3% to 157.56, after markets were disappointed by their plans to tighten policy.
The Bank of Japan kept interest rates steady and said it would only give clear signals about its plans to start reducing its bond purchases at its July meeting, and that it would meet with market participants in the meantime to gain more insight.
The index rose 0.1% to 7.2557, rising to the highest level in almost seven months, with sentiment towards China affected by the European Union imposing heavy tariffs on electric car imports from China.