London (awp/afp) – The dollar hesitated on Friday before the publication of a highly anticipated inflation index in the United States, which could convince the Federal Reserve (Fed) to begin lowering its interest rates or, on the contrary, to wait.
Around 11:25 a.m., the greenback rose slightly against the single currency, which lost 0.06% to $1.0695, and remained almost stable against the British currency, which fell by 0.01% to $1.2638.
The market is watching for the release of the PCE index for May, the Fed’s preferred gauge of inflation, which is expected to rise year-on-year to 2.6%, down from 2.7% in April, according to analyst consensus.
“If the US data suggests that the slowdown in inflation is not fast enough,” “the market could moderate its expectations” of a first rate cut by the Fed as early as this year, which “would be positive for the dollar,” comments Antje Praefcke, an analyst at Commerzbank. Higher rates are indeed synonymous with higher returns for the American currency, reinforcing its attractiveness in the eyes of investors.
On Tuesday, Fed Governor Michelle Bowman was quoted in the Financial Times as saying she remained “prepared to raise” borrowing costs again “if the progress on inflation stalls or even reverses” in the United States, that is, if price increases stagnate or accelerate again. Other U.S. data released Thursday was mixed.
The increase in US GDP in the first quarter of 2024, although revised slightly upwards to 1.4% at an annualized rate, compared to 1.3% previously, confirms the slowdown in activity compared to the 3.4% recorded in the last quarter of 2023.
While weekly U.S. jobless claims came in lower than expected, which could signal a robust jobs market and fuel inflation, analysts said that was largely due to a public holiday. The Japanese currency was steady at 160.76 yen to the dollar.
Earlier in the session, the yen had reached a new low since 1986 against the greenback, touching 161.27 yen. Currency traders appear to be “looking for the limit” that will prompt Tokyo’s action on the foreign exchange market to support its currency – some speaking of 165 yen to the dollar – with “the risk of intervention increasing” as the yen rises. weakens, summarizes Ipek Ozkardeskaya, analyst at Swissquote Bank.
Friday classes Thursday classes
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09H25 GMT 21H00 GMT
EUR/USD 1,0695 1,0704
EUR/JPY 171.93 172.08
EUR/CHF 0.9622 0.9619
EUR/GBP 0,8462 0,8468
USD/JPY 160,76 160,76
USD/CHF 0,8997 0,8986
GBP/USD 1,2638 1,2639
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