Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Dollar slips lower, sterling gains after first quarter growth data

Published 12/05/2023, 08:36
Updated 12/05/2023, 08:36
© Reuters.

Investing.com - The U.S. dollar edged lower in early European trade Friday, handing back some overnight gains, while sterling edged higher after the release of first quarter U.K. growth data.

At 03:15 ET (07:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 101.785, on course to gain just under 1% this week, ending a two-week losing streak.

Data released Thursday showed the number of Americans filing new claims for unemployment benefits jumped to a 1½-year high last week, while producer prices rebounded modestly in April.

This suggests the U.S. Federal Reserve could pause its aggressive monetary tightening cycle in June, expectations that have weighed on the dollar for much of the year.

However, the dollar received a boost on Thursday, with the index climbing to its highest since May 2, on uncertainty surrounding the raising of the U.S. debt ceiling.

A meeting between U.S. President Joe Biden and top lawmakers about the subject that was scheduled for Friday has been postponed, and the U.S. federal government could run out of money to pay its bills as soon as June 1 unless the debt ceiling is raised.

“The dollar bounce seen yesterday was the result of some position-squaring and below-consensus data,” said analysts at ING, in a note, “while the still unstable risk environment caused by recessionary fears and the US debt ceiling stalemate keeps creating a breeding ground for more defensive positions in FX.”

Elsewhere, GBP/USD rose 0.2% to 1.2535, bouncing after data showed that U.K. gross domestic product grew by 0.1% in the first three months of 2023, despite an unexpectedly sharp drop of 0.3% in March.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The Bank of England hiked interest rates by 25 basis points on Thursday, its 12th straight interest rate increase as it attempts to combat inflation still in double digits.

“While we don’t exclude one final June hike, our base case is that we have reached the peak of the BoE tightening cycle as inflation will start to rapidly decelerate this year,” added ING.

EUR/USD rose 0.2% to 1.0930, USD/JPY climbed 0.2% higher to 134.83, with the yen set for small weekly gains on safe haven demand, while AUD/USD fell 0.1% to 0.6694.

USD/CNY edged lower to 6.9463, but remained close to the psychologically important 7 level against the dollar on doubts about the strength and speed of the recovery of the Chinese economy.

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.