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Dollar Up but Ends Week Near One-Month Low Over U.S Data, Fed Decision

ForexJul 30, 2021 06:48
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By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia but remained near a one-month low.  The U.S. Federal Reserve maintained a dovish stance in its latest policy decision, and disappointing U.S. economic data also curbed the U.S. currency’s month-long rally.

The U.S. Dollar that tracks the greenback against a basket of other currencies edged up 0.11% to 91.970 by 12:34 AM ET (4:34 AM GMT), It fell as low as 91.855 on Thursday, a level not seen since Jun. 29, and was set to end the week off 1%, its worst weekly showing since early May 2021. The index is also down 0.5% for the month so far after its 2.8% rally the month before.

The USD/JPY pair inched up 0.03% to 109.50.

The AUD/USD pair inched down 0.08% to 0.7389 and the NZD/USD pair inched down 0.08% to 0.7003.

The USD/CNY pair inched up 0.06% to 6.4600 while the GBP/USD pair inched down 0.09% to 1.3948. The pound was near its highest in over a month, boosted by the dollar’s weaker tone and a fall in daily COVID-19 cases in the U.K.

Fed Chairman Jerome Powell’s comments, made as the central bank handed down its policy decision on Wednesday, set the greenback on a downward trend. Powell insisted that interest rate hikes were “a ways away” and the job market still had “some ground to cover” before asset tapering could begin.

“While the Fed continued to say it was moving towards winding back its money-printing program, the Fed’s move towards this shift looks likely to be slower than previously anticipated,” Western Union (NYSE:WU) Business Solutions currency strategist Steven Dooley told CNBC.

“The Fed’s caution is seen due to a slowdown in U.S. growth, easing in inflation and worries about the COVID-19 Delta variant,” he added.

Thursday's U.S. GDP figures for the second quarter of 2021 also failed to provide the dollar with support. Although the U.S.’s GDP grew a solid 6.5% quarter-on-quarter in the second quarter of 2021, it was lower than both the 8.5% in forecasts prepared by Investing.com and the 6.3% growth recorded for the first quarter.

Further data from the U.S., including the second-quarter employment cost index, personal income and spending for June and the University of Michigan consumer sentiment index for July, are due later in the day.

Across the Atlantic, the euro climbed to a one-month high against the dollar, last trading at $1.1886 ahead of a slew of data. Second-quarter German, Italian and eurozone GDPs, alongside French, German, Italian and eurozone consumer price indexes for July as well as the eurozone unemployment rate, are due later in the day.

In Asia Pacific, the yuan clawed back most of its losses from Tuesday, although it remained slightly on the back foot ahead of the open of onshore markets on Friday. Sentiment was aided somewhat by Chinese attempts to calm the market by telling foreign brokerages to avoid “overinterpreting” its recent crackdown on sectors including private education.

Dollar Up but Ends Week Near One-Month Low Over U.S Data, Fed Decision
 

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