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


© Reuters.

By Peter Nurse – The U.S. dollar rose in early European trade on Friday, but looks set to post a second straight quarterly loss ahead of key U.S. inflation data.

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

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

The turmoil in the US banking sector, in particular, has resulted in traders reassessing their view of future moves, and now sees as close to a peak, which will erode the yield advantage of the dollar.

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

The Fed’s favorite gauge of inflation, the , is due later in the session, and is expected to show that the index, which strips out energy and food, rose 0.4% from the previous month and 4.7% through February.

traded mostly flat at 1.0901, after a disappointing but gained 0.5% on Thursday after robust figures bolstered expectations that the still has rates to announce this year.

for March is to be released later in the session, and could be on top of the expected 7.1% annual increase given Thursday by German numbers.

rose 0.1% to 1.2392, after data showed that it grew in the fourth quarter of last year, with GDP increasing 0.1% from the previous three months after contracting 0.3% in the third quarter , a smaller contraction than previously thought.

“The economy performed slightly stronger in the latter half of last year than previously estimated, with later data showing that telecommunications, construction and manufacturing were all doing better than initially thought in the last quarter,” said ONS statistician Darren Morgan.

Risk-sensitive traded flat at 0.6706, up 0.4% to 133.12, while falling 0.1% to 6.8645 after data showed Chinese business activity grew at its fastest pace in more than a decade, even if the recovery was uneven as activity grew more than expected while growth in the slowed down from the previous month.



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