Major currencies were range-bound on Friday as broadly positive US data yesterday failed to give markets any direction. Traders are instead looking to Yellen’s appearance later today for further clues on the Fed’s intentions at the June policy meeting. Yellen is due to participate in a discussion on interest rates at Harvard University.
In the meantime, there were more hawkish comments from Fed policymakers as Washington DC Fed President Jerome Powell said on Thursday that another rate rise should be appropriate “fairly soon”.
The dollar was slightly down against a basket of currencies in Asian trading on Friday with the dollar index set the end the week with its first weekly loss in a month. Markets chose to ignore a batch of strong US data out yesterday including durable goods orders and jobless claims and were more concerned on disappointing capital goods orders.
The greenback was unable to hold on to the 110 yen level and slipped to 109.68 yen in late Asian trading today. Stronger-than-expected inflation data for Japan gave some support to the yen on Friday.
Nationwide CPI in Japan declined by 0.3% on an annual basis in April, which was down from 0.1% the prior month but above estimates of -0.4%. The core rate, which is targeted by the Bank of Japan and which excludes fresh foods, also came in at -0.3% and was above expectations of -0.4%.
April’s slightly better-than-forecast data is unlikely to be enough to convince the Bank of Japan that further easing is not required but nevertheless provided some boost to the yen today.
In European currencies, the euro was steady against the dollar at around 1.1183 but sterling fell back slightly to around 1.4645 dollars in late Asian session.
Commodities were weaker on Friday as crude oil prices took a pause from yesterday’s break above $50 a barrel. There are concerns that higher prices could unlock more supply and this could cap further gains in the near term. Gold prices were higher though as they rebounded in late Asian trading to recoup some of the week’s sharp losses. The prospect of higher US interest rates has driven gold prices down from a yearly high of $1303 per ounce at the start of the month to around $1220 currently.
Coming up later today, the second estimate of US GDP for the first quarter will be the main item of the day apart from Yellen’s speech. But also to watch will be the University of Michigan final confidence reading for May and the latest US weekly oil rig count.