Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Up, But Near Four Week Lows Thanks to Fed’s Dovish Tone

Published 04/30/2021, 12:22 AM
Updated 04/30/2021, 12:36 AM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia but was set for a fourth consecutive week of losses, as the U.S. Federal Reserve sticks to its dovish monetary policy.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.03% to 90.618 by 12:26 AM ET (4:26 AM GMT).

The USD/JPY pair inched down 0.10% to 108.81. Japanese data released earlier in the day said industrial production increased 2.2% month-on-month in March, while the Tokyo core Consumer Price Index contracted 0.2% year-on-year in April.

The AUD/USD pair was up 0.24% to 0.7782, with Australia’s Producer Price Index rising 0.2% year-on-year, and 0.4% quarter-on-quarter, in the first quarter of 2021. The NZD/USD pair edged up 0.11% to 0.7253.

The USD/CNY pair inched down 0.04% to 6.4684. China’s manufacturing Purchasing Managers Index (PMI) for April was 51.1, while the non-manufacturing PMI was 54.9. The Caixin manufacturing PMI for April was 51.9 and the Caixin services PMI is due in the following week.

The GBP/USD pair inched up 0.08% to 1.3951.

The dollar index (DXY) is set to end the week with a 0.2% loss, and a 2.8% loss for the month. The greenback’s losses were its Canadian counterpart’s gains, with the latter climbing to a more-than-three-year high against the U.S. dollar on Friday.

Investors are still digesting the Fed’s latest policy decision, handed down on Wednesday. Although Fed Chairman Jerome Powell acknowledged the U.S. economy's growth, he added that there was not yet enough evidence of "substantial further progress" toward recovery to justify a change in policy.

Optimism that signs of economic recovery, particularly in the labor market, could force the Fed into tapering its asset purchases earlier than expected, drove DXY to a five-month high in March 2021.

"DXY may attempt a rebound in coming days as expectations turn to potentially blockbuster April payrolls next week, but gains will prove short-lived with Fed officials to underscore Powell’s resolutely dovish stance," Westpac strategists said in a note.

The gauge is likely to drop below 90 in the near term, from 90.6 currently, but the "DXY's depreciation trend is likely more of an ongoing grind than a wholesale sharp setback," the note added.

Data released on Thursday said that the U.S. GDP rose 6.4% quarter-on-quarter in the first quarter of 2021 and 553,000 initial jobless claims were filed over the past week.

The Fed’s stance contrasts with that of its northern neighbor. The Bank of Canada has already begun tapering its asset purchases, and the commodity-linked Canadian dollar got a further boost from rising oil prices, which were at a six-week high.

The prices also boosted the Australian and New Zealand dollars, which are also linked to commodities.

In cryptocurrencies, ether was just below a record high of $2,800.89 set on Thursday, driven by media reports about the European Investment Bank's plans to launch a "digital bond" sale on the ethereum blockchain network.

Latest comments

economia en Panamá
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.