Please try another search
© Reuters.
By Peter Nurse
Investing.com - The U.S. dollar edged higher Friday, boosted by strength against the Japanese yen, while the euro pushed higher following the hawkish turn by the European Central Bank.
At 3 AM ET (0800 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 98.627.
USD/JPY rose 0.5% to 116.70, climbing to its highest level since January 2017, and up 1.5% this week, its biggest weekly gain since October.
This move follows Thursday’s release of data showing that U.S. consumer prices surged 7.9% year-over-year in February, the largest annual increase in 40 years.
Both the Federal Reserve and the Bank of Japan have policy meetings next week, but while this inflation release all but confirms the Fed will tighten monetary policy in the form of an interest rate hike, the BOJ is set to retain a dovish monetary policy.
EUR/USD edged higher 0.1% to 1.0984, the day after the European Central Bank announced it would be speeding up its plans to tighten monetary policy, phasing out all of its asset purchases in the summer if inflation fails to come down fast enough.
Still, while the euro is higher, it has struggled to retain most of the gains seen after the announcement.
“By ending asset purchases sooner than anticipated, the central bank is taking the dangerous step of tightening in the face of slowing growth. Even [ECB President Christine] Lagarde said the risks to growth are to the downside,” said Kathy Lien, an analyst at BK Asset Management.
Analysts from Goldman Sachs stated on Thursday that they expect economic output in the Eurozone to actually shrink in the second quarter, citing the region’s proximity to the war in Ukraine.
ABN Amro now has a base case of EUR/USD falling to parity or even below for the first time in about two decades, with the supply disruptions to key commodities disproportionately hitting the euro area economy and delaying European Central Bank tightening.
Elsewhere, GBP/USD was flat at 1.3081, despite Britain's economy rebounding much more than expected in January, with GDP climbing 0.8% on the month in January after a 0.2% decline in December.
The Bank of England policymakers meet next week and were already widely expected to hike interest rates once more, even before this stronger than expected data.
AUD/USD lost a little ground on Friday, down 0.2% to 0.7345, after the recent strong rally due to higher commodity prices.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.