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Dollar Weakens; Concerns Over Fed Tapering Ease

Forex May 21, 2021 03:05AM ET
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By Peter Nurse

Investing.com - The dollar traded lower in early European trade Friday, heading for a weekly loss as concerns eased over Federal Reserve members discussing potentially tapering back bond buying.

At 3 AM ET (0800 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 89.737, down about 0.6% for the week so far. 

EUR/USD traded 0.1% higher at 1.2237, not far below the four-month high of 1.2245 it hit earlier in the week, USD/JPY was 0.1% lower at 108.71, while the risk-sensitive AUD/USD was down 0.2% at 0.7756.

The dollar has given back a bounce it made after a mention of possible future tapering discussions, in minutes from the Fed's April meeting, prompted fears of early rate rises.

“News from the FOMC minutes that a number of participants felt that tapering of asset purchases might be discussed at upcoming meetings could have given the dollar a big boost,” said analysts at ING, in a note. “The fact that it hasn't probably owes to the fact that progress towards the Fed goals is still ongoing and that the first Fed rate hike would still be a 2023 story.”

Data released on Thursday showed that U.S. initial jobless claims fell to 444,000 over the past week, a new post-pandemic low, adding to evidence of a steady recovery in the labor market.

That said, the number of continuing claims, which are measured with a one-week time lag to initial ones, rose by over 100,000, suggesting the recovery still has some way to go.

Elsewhere, GBP/USD fell 0.1% to 1.4182, just short of multi-year highs, after British retail sales surged by 9.2% in April, when non-essential shops reopened after months of closure due to Covid restrictions, their biggest jump since a previous reopening in June.

Sterling is heading for a third consecutive weekly gain and has climbed 2.6% during May so far.

USD/ZAR is up 0.1% at 13.979 after South Africa’s central bank held its benchmark interest rate for a fifth straight meeting on Thursday, looking through a temporary pickup in inflation as the country faces a resurgence in coronavirus infections.

 

Dollar Weakens; Concerns Over Fed Tapering Ease
 

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Comments (5)
Luqman Firdaus
Luqman Firdaus Jun 17, 2021 9:48PM ET
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Miles Mathewson
Miles Mathewson May 21, 2021 7:22AM ET
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Even with Brexit Sterling is trending higher while here in the US USD only goes down on the spending bonanza!
Miles Mathewson
Miles Mathewson May 21, 2021 7:21AM ET
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A weak dollar only triggers inflation !!! Old Joe doesn't have a clue !
Mike Chen
Mike Chen May 21, 2021 5:10AM ET
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With unlimited of money supply, nothing to worry about. Rich people have no worries!
Jouni Matero
Jouni May 21, 2021 4:34AM ET
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There should be concerns over many other things too like inflation, housing, covid, employment, etc... List goes on but market rises lol
 
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