© Reuters. FILE PHOTO: A US dollar bill is shown in this illustration taken on May 26, 2020. REUTERS / Dado Ruvic / Illustration
De Saqib Iqbal Ahmed
NEW YORK (Reuters) – The US dollar slowed its three-day losing streak on Friday as the recent sell-off rallied caused by the tightening of Federal Reserve tightening declines and weaker risk appetite in financial markets led investors to avoid. riskier currencies.
The was 0.3% higher at 95.157, but still looked to end the week down about 0.6%, its worst weekly showing since early September.
The green dollar, which has risen more than 6% against a basket of currencies in 2021, slumped this week despite Fed Chairman Jerome Powell saying the U.S. economy is ready for the start of a tighter monetary policy and data showing the most a large annual rise in inflation. in almost four decades.
“Investors seem to think that the USD has reached a peak and that the Fed’s tight moves have prices and similarities of the euro offer better potential yields along the way,” Scotiabank strategists said in a foreign exchange note.
“We disagree, but must acknowledge that the USD has suffered a setback – psychologically, at least – by breaking with supportive performance spreads against its peers and breaking below the base of its recent consolidation range,” they said.
A hedge fund dollar position near the highest levels since early 2020 has added to the selling pressure on the dollar this week, analysts said.
U.S. retail sales declined for the most part in 10 months in December, likely as a result of Americans starting their holiday shopping in October to avoid empty shelves in stores. [nL1N2TU18H]
On Friday, the dollar struggled to advance against the Japanese yen, and the U.S. currency fell 0.02% to more than a three-week low of 114.15 yen.
The safe haven Japanese currency has benefited from the recent escalation of risk sentiment in global financial markets.
Bank of Japan politicians are debating how soon they can start telegraphing a possible interest rate that could come even before inflation hits the bank’s 2% target, Reuters reported on Friday.
With global stock markets under pressure on Friday and Treasury yields higher, the Australian dollar, seen as a liquid proxy for risk appetite, fell 0.99% to a two-day low.
Sterling was 0.22% lower against the dollar as investors assessed the impact of a possible change in leadership in the country as Prime Minister Boris Johnson faces the worst crisis of his prime minister following revelations about a series of meetings in Downing Street during COVID-19 lockdown .
Cryptocurrencies struggled to make a significant rebound after sharp losses earlier in the week. was up 1% on the day at $ 43,086.34, not far from the five-month low of $ 39,558.70 touched on Monday.
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