🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Dollar edges higher, but set for weak quarter ahead of key inflation data

Published 2023/03/31, 09:24
© Reuters.

By Peter Nurse

Investing.com - The U.S. dollar edged higher in early European trade Friday, but looks set to record a second consecutive quarterly loss ahead of key U.S. inflation data.

At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 101.860, not far off its lowest level since early February.

The index is down 1.3% year to date, extending a 7.7% fall in the fourth quarter of 2022.

The turmoil in the U.S. banking sector, primarily, has resulted in traders reassessing their view of future Federal Reserve moves, and now see U.S. interest rates as close to peaking which would erode the dollar's yield advantage.

However, this view is dependent on there being signs that the Fed is winning its battle against inflation.

The Fed's favorite gauge of inflation, the core PCE price index, is due later in the session, and is expected to show that the index, which strips out energy and food prices, will rise 0.4% from the prior month and 4.7% for the year through February.

EUR/USD traded largely flat at 1.0901, after disappointing German retail sales, but having gained 0.5% on Thursday after robust German inflation figures reinforced expectations that the European Central Bank still has rate increases to announce this year.

Euro zone CPI for March is due for release later in the session, and there could be upside to the expected 7.1% annual rise given Thursday’s German numbers release.

GBP/USD rose 0.1% to 1.2392, after data showed that Britain's economy grew in the fourth quarter of last year, with GDP increasing 0.1% from the previous three months after shrinking by 0.3% in the third quarter, a smaller contraction than previously thought.

"The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter," ONS statistician Darren Morgan said.

Risk-sensitive AUD/USD traded flat at 0.6706, USD/JPY rose 0.4% to 133.12, while USD/CNY fell 0.1% to 6.8645 after data showed that overall Chinese business activity grew at its fastest pace in over a decade, even if the recovery was uneven as service sector activity grew more than expected while growth in the manufacturing sector slowed from the prior month.

Latest comments

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.