The US dollar rose against the euro on Friday, but trimmed gains at the end of a session that was overshadowed by quarter-end trading, as riskier commodity-led currencies fell sharply after European inflation eased. hit a record high and US consumer spending rose faster than expected.
Although the dollar index showed its largest quarterly gain since the first quarter of 2015, it recorded its first weekly decline in three weeks.
The pound rose against the dollar after falling earlier in the day. The pound last showed four consecutive sessions of gains followed by a wild drop on concerns over Britain’s plan to cut taxes and pay them off with more loans.
After hitting an all-time low on Monday, the British currency was on track for a weekly gain after the Bank of England bought British government bonds, known as gilts, on Wednesday, Thursday and Friday.
Data on Friday showed that euro zone inflation has zoomed past forecasts to hit 10% for last month, bolstering expectations for another huge European Central Bank rate hike next month.
The U.S. Department of Commerce said the Personal Consumer Spending Price Index, which the U.S. Federal Reserve is targeting 2%, rose 6.2% year-on-year in August. This gave the Fed one less reason to slow its rate hike cycle after raising US financial costs this year faster than in any other period since the 1980s.
“Today’s trading is distorted by quarter-end and month-end order flows,” as investors focused on portfolio rebalancing rather than data, said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi. US in Boston.
The strategist said he expects to see the dollar continue its upward direction when investors return to trading fundamentals.
“At this point you cannot fight the strong dollar uptrend as it is supported by countercyclical factors such as concerns about global growth, geopolitical risk and rising US interest rates,” Upadhyaya said.
In Taipei, the new Taiwan dollar fell against the greenback on Friday, losing NT $ 0.104 to close at NT $ 31.743, down 0.25% for the week.
Meanwhile, currency trading from heavily commodity-dependent countries reacted strongly to Friday’s hot inflation data due to concerns about global economic growth and demand, Upadhyaya said.
The US dollar was up 1.04% against the Canadian dollar, while the New Zealand dollar fell 2.24% and the Aussie dollar fell 1.62.
The pound, after hitting US $ 1.1235, rose 0.28% on the day to US $ 1.11500.
The euro fell 0.10% to $ 0.98055.
The dollar index, which measures the greenback against a basket of major currencies, fell 0.07%, but was up 6.69% over the quarter. On a weekly basis, the index fell 0.9%, the first decline in three weeks.
Additional reporting by the staff editor, with CNA
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