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Dollar recovers from Fed statement, rises against rivals

Published 06/19/2015, 04:48 AM
Updated 06/19/2015, 04:48 AM
© Reuters.  Dollar bouces back from Thursday's losses, U.S. data supports

© Reuters. Dollar bouces back from Thursday's losses, U.S. data supports

Investing.com - The dollar was broadly higher against a basket of other major currencies on Friday, as the U.S. currency recovered from sharp losses posted after the Federal Reserve's most recent policy statement and as Thursday's positive economic reports lent support.

The dollar found support after data on Thursday showed that U.S. initial jobless claims fell by 12,000 to 267,000 last week, pointing to ongoing strengthening in the labor market.

A separate report showed that factory activity in the U.S. mid-Atlantic region expanded at the fastest rate in six months in June.

Data also showed that showed that U.S. consumer prices increased at the fastest rate in more than two years in May, climbing 0.4% after a 0.1% gain in April. But economists had forecast an increase of 0.5% and inflation was still well below the Fed’s 2% target.

The greenback had come under broad selling pressure after the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections at its policy meeting on Wednesday, prompting investors to push back expectations on the timing of an initial rate hike.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% at 94.51, off Thursday's one-month lows of 93.30.

EUR/USD declined 0.48% to 1.1309 as concerns over Greece's future in the euro zone persisted after a meeting between Greek and euro area officials broke down on Thursday.

The current bailout for Greece expires on 30 June when Athens is also due to repay the International Monetary Fund around €1.6 billion.

IMF Chief Christine Lagarde said if the payment is not made on time, Greece will be declared to be in default and would disqualify itself from receiving any further IMF funds.

The pound was also lower, with GBP/USD down 0.10% to 1.5862, off Thursday's seven-month highs of 1.5930.

Earlier Friday, the Office for National Statistics reported on Friday that U.K. public sector net borrowing hit £9.35 billion last month, up from £5.46 billion in April, whose figure was revised from a previously estimated £6.04 billion.

Analysts had expected public sector net borrowing to climb to £10.05 billion in May.

Elsewhere, the dollar was higher against the yen and the Swiss franc, with USD/JPY up 0.10% to 123.07 and with USD/CHF adding 0.11% to 0.9225.

At its monthly policy meeting on Friday, the Bank of Japan maintained its pledge to increase base money at an annual pace of ¥80 trillion through aggressive asset purchases. The decision was made by an 8-1 vote.

Commenting on the decision, BoJ Governor Haruhiko Kuroda said that with capital expenditure growing and business sentiment improving, inflation is likely to reach the 2% target without the need for more monetary easing.

The Australian and New Zealand dollars were weaker, with AUD/NZD down 0.37% to 0.7769 and with NZD/USD shedding 0.26% to 0.6908, close to Wednesday's five-year lows of 0.6873.

Meanwhile, USD/CAD held steady at 1.2222.

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