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Forex - Dollar Fails To Avoid Weekly Loss Despite Rise From 3-Year Low

Published 02/16/2018, 01:20 PM
Updated 02/16/2018, 01:20 PM
© Reuters. – The dollar rose against a basket of major currencies but is set to end the week sharply lower after suffering heavy losses against both yen and euro throughout the week.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.41% to 88.83.

The dollar rose from three-year lows as traders cheered bullish economic data which topped economists’ forecasts, adding to the narrative of a strengthening US economy.

The Commerce Department reported building permits rose to a seasonally adjusted annual rate of 1.396 million units, while housing starts grew at a monthly pace of 9.7% to 1.326 million units.

The University of Michigan’s consumer sentiment index showed a preliminary reading of 99.9 in February, topping expectations for a reading of 95.4.

Yet the greenback remained on track to record weekly loss after sharp losses against both the yen and euro during the week amid diverging global monetary policy.

Mizuho bank earlier this week said the dollar’s weakness in the wake of recent upbeat economic data reinforced its view that “monetary policy divergence is raising the attractiveness of euro and yen assets to international investors.”

Yet the yen had a timid end to the week as Haruhiko Kuroda was reappointed Governor of the Bank of Japan. Over the past few months, Kuroda has attempted to quash investor expectations that the central bank is nearing a shift in stance on monetary policy from easing to tightening.

USD/JPY fell 0.03% to Y106.309, while EUR/USD fell 0.51% to $1.2440.

USD/CAD gained 0.45% to C$1.2545 as rising oil prices weighed on the pair, providing support to the loonie.

GBP/USD fell 0.50% to $1.4040.

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