Dollar index slips, still on track for biggest weekly gain since Feb.
The U.S. dollar fell back into negative territory against many of its main rivals late Friday after rallying earlier in the session on a spate of economic data. But it remained on track for the strongest weekly gain since February.
Where are currencies trading?
The ICE U.S. Dollar Index DXY, -0.06% which measures the buck against a basket of six major rivals, eased 0.1% to 93.002. It traded midweek at around the highest levels since Aug. 23, according to FactSet data, helping to salvage the slender monthly gain. For the week, the index is up 0.9% but is off 2.8% for the quarter.
The WSJ U.S. Dollar index BUXX, +0.03% which compares the dollar against 16 other currencies, was little changed at 86.23. On the week, it gained 0.8% on the week.
Against its Japanese counterpart USDJPY, +0.13% the dollar last fetched ¥112.45, compared with ¥112.35 late Thursday in New York. Earlier this week, the U.S. currency traded above ¥113 for the first time since mid-July, according to FactSet data. Still, its weekly gain only stood at 0.4% late Friday. For the month, it’s headed for a 2.2% gain, leaving it up 0.1% for the quarter.
The euro EURUSD, +0.2206% firmed to $1.1826, up from $1.1788 late Thursday in New York, having lost more than 1% week-on-week. The shared currency is off 0.7% for the month but is set to turn in a quarterly rise of 3.5%.
The British pound GBPUSD, -0.3125% was buying $1.3418, down from $1.3441 on Thursday. On the week, sterling slipped 0.6%. Sterling saw a 3.8% rise in September, setting it up for a 2.9% quarterly gain.
Against the Swiss currency USDCHF, -0.2062% the dollar was last buying 0.9678 francs, versus 0.9700 francs late Wednesday, after scoring its highest level since mid-June earlier in the week. The dollar rose 0.9% verus the franc in September and around 1% for the quarter.
Against the Canadian dollar USDCAD, +0.3460% the greenback rose to C$1.2472 from C$1.2428 late Thursday, after Canada’s gross domestic product by industry remained flat in July, compared with the FactSet consensus forecast of 0.1%. The U.S. unit is set for a 0.1% monthly fall versus its Canadian counterpart and is down 3.8% for the quarter.
What’s driving the buck?
Interest-rate differentials remain a key factor. The dollar rally has largely been supported by hints from the Fed that interest rates will go up in December, and rise a few more times in 2018. European Central Bank President Mario Draghi earlier in September indicated it will unveil plans to start scaling back its aggressive easing program in October. Meanwhile, the Bank of England hinted that rates could rise for the first time in a decade in November.
Elsewhere, the unemployment rate in Germany fell to a record low in September at 5.6% as jobless claims declined more sharply than expected. Eurozone inflation in September was stable at 1.5%, missing forecasts of a 1.6% reading.
Softer GDP data triggered a down move in the pound. U.K. GDP for the second quarter, at 1.5%, was down from previous estimates of 1.7%.
What are market participants saying?
“Part of the reason for [euro-dollar’s] sluggish performance can be explained away by a rebounding U.S. dollar, which has recently found support on renewed hawkishness from the Federal Reserve,” said Fawad Razaqzada of the euro-dollar pair’s weak performance this week. “From the eurozone, political uncertainty and disappointment that the European Central Bank has so far refused to taper QE despite an improving economy has also weighed on the euro. The ECB has also recently attempted to talk down the single currency, which has arguably worked so far.”
What are the data saying?
- Personal income for August rose 0.2%, more than the MarketWatch consensus forecast of 0.1%, while consumer spending for the same month increased 0.1%, in line with the consensus.
- August core inflation rose 0.1% on the month, missing expectations of 0.2
- The Chicago PMI for September, measuring overall business activity, came in at 65.2, up from 58.9 in August.
- September consumer sentiment was reported at 95.1, in line with MarketWatch consensus forecasts.