© Reuters.
Investing.com – The US dollar rose in early European trade on Friday, rebounding after sharp losses in the previous session as traders sought a safe haven after weak Chinese inflation data.
At 02:55 ET (06:55 GMT), which measures the greenback against a basket of six other currencies, it was trading 0.1% higher at 103.358, after losing more than 0.7% in the previous session, the biggest daily decline. him for weeks. .
The safe haven dollar is receiving support from Chinese data
The dollar was in demand early on Friday after data showed that China contracted in May from the previous month, while falling at the highest pace in seven years.
It followed a string of weak economic readings from China in the past two weeks, suggesting that the world’s second-largest economy, and a major driver of regional growth, was struggling to recover from the spread of the coronavirus.
This may prompt the Chinese government to take more supportive measures in the coming months, but it is likely to weaken the yuan further in favor of the dollar.
It rose 0.1% to 7.1215, with the yuan hovering around six-month lows.
The dollar is still on track for the worst week since March
However, the rebound in the greenback came after heavy losses in the previous session after weakness signaled a pause in the year-round interest rate hike cycle.
The dollar fell 0.6% for the week, heading for its worst week since mid-March.
Data released Thursday showed that the number of Americans filing applications rose to the highest level in more than a year and a half last week.
With signs of labor market weakness, the release on the last Tuesday in May looms large as it comes before central bank officials meet to make their decision on interest rates.
De Guindos will be speaking from the European Central Bank
It fell 0.1% to 1.0777. The ECB vice president is due to speak at an event in Madrid later in the session.
Traders will seek guidance ahead of the European Central Bank’s policy-setting meeting next week, although it is widely expected to pick up again.
April data is due later in the session and is expected to have risen just 0.1% in the month.
Elsewhere, it rose to 1.2562 near a one-month high, and was trading flat at 0.6717, while rising 0.4% to 139.41.
It rose 1.7 percent to 23.4950, with the lira dropping to another record low against the dollar after President Recep Tayyip Erdogan appointed Hafiz Gay Erkan, the chief financial officer in the United States, to head the Turkish central bank.
These moves signal a shift toward dogma in Turkey’s monetary policy, which could take a hit on the country’s economy as interest rates rise.