Investing.com – The U.S. dollar steadied on Friday after losing ground in the previous session on weak jobs data, while the British pound gained on the back of higher growth figures provided that.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded slightly higher at 105.115.
Dollar on track for small gains this week
The dollar stabilized on Friday and is on track for minor gains this week following Thursday’s losses following the release of data showing a larger-than-expected rise in weekly |obless claims.
This evidence of the cooling U.S. labor market reinforced some expectations that the Federal Reserve would begin cutting interest rates by September.
However, low inflation remains a major sticking point for the Fed, as several officials pointed out this week, comments that boosted the dollar this week.
San Francisco Federal Reserve President Mary Daly said Thursday there is “considerable” uncertainty about the direction U.S. inflation will take in the coming months.
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“In a scenario where inflation stays…at the same level, doesn’t rise much further, it’s not appropriate to start adjusting the rate unless we see the labor market running out of steam,” he said. she added.
The comments put the upcoming Consumer Price Index data, due next week, in focus for more clues on interest rates.
Sterling benefits from strong growth data
In Europe, the rose 0.1% to 1.2534, recovering from its lowest level since April 24 on Thursday, after data released earlier on Friday showed the British economy grew at its strongest in almost three years during the first quarter of 2024.
The UK’s gross domestic product grew by 0.6% in the three months to March, the strongest growth since the fourth quarter of 2021, as the country’s economy emerged from the mild recession it had entered during the second half of last year.
On a monthly basis, the economy grew 0.4% in March, faster than the forecast of 0.1%.
The Bank of England kept interest rates at their highest level in 16 years on Thursday, but two of the nine members of the Monetary Policy Committee voted in favor of a cut, suggesting that the central bank is moving towards such a reduction.
The was trading virtually unchanged at 1.0783, with a light data schedule providing little boost.
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The European Central Bank has all but promised a rate cut on June 6, but there is uncertainty over how many more cuts it will agree to this year.
Pierre Wunsch, Belgium’s central bank governor, argued for new measures earlier this week, saying it was riskier to wait too long than to ease monetary policy too soon.
Markets are currently pricing in a rate hike of 70 basis points this year.
USD/JPY on the rise
In Asia, the rose 0.2% to 155.70, trading well above the lows of 152 it hit earlier in May.
Traders now view the 160 level as the new line in the sand for Japanese government intervention.
The rose 0.1% to 7.2249, as the yuan weakened following reports that the United States was higher. President Joe Biden was considering imposing new sanctions on certain Chinese industries, such as electric vehicles and batteries.
Although the economic impact of the tariffs is unclear, such measures could lead to retaliation from China, further souring relations between the world’s two largest economies.
