FOREX: US Dollar Slips after Currencies Traders Take Profits
The United States dollar started higher on Friday before slipping on profit-taking ahead of the long holiday weekend. Next week Monday, both Britain and United States have scheduled holidays, thus pushing for profit-takings among currency traders.
It was noted that dollar traders seemed to shrug off the stronger-than-expected personal consumption expenditure (PCE) price reading and a 48-year high for Chicago purchasing managers index (PMI) Friday morning, instead of shifting focus to next week’s ISM data and the May employment report on June 4.
MarketForces Africa’s research analysts summary of Friday’s foreign exchange action includes: EUR-USD fell to two-week lows of 1.2133 in early US trading hours but has climbed back to just shy of 1.2200.
Firmer Treasury yields lifted the dollar overnight but shifted back after the data as markets appear to have accepted the Fed’s stance that higher inflation does not call for an immediate change of monetary policy.
GBP-USD rallied through the session, topping at 1.4194 into the London close, after opening near 1.4135.
The dollar pulled back broadly through the session, with profit taking cited after the DXY printed two-week high of 90.44. The USD lifted into the data but slowed its ascent later in the day.
USD-JPY touched better than one-month highs of 110.20 earlier in the day from overnight lows of 109.80.
Even though the pair settled back below 110 later in the day, the outlook for USD-JPY is to the upside due to the COVID situation in Japan.
USD-CAD fell back to 1.2063 lows, down from early US highs of 1.2120. The USD overall has pared gains it saw through the London morning session, which took the DXY to six-session highs.
Firm WTI crude prices remain supportive of the CAD, and given the overall bid in commodities, which is likely to persist as economies continue to reopen, USD-CAD can be expected to test its six-year low of 1.2013, seen on May 18.
The major currency that would most likely lose against the dollar is the Japanese yen due to Japan’s recovery from the pandemic compared with Europe and Britain.
The dollar gained against the yen early on Friday and hit a seven-week high before easing to show little change on the day. The dollar JPY=EBS last traded around 109.77 yen after reaching as high as 110.2.
Japan has seen a rise in unemployment, falling consumer prices and government moves to extend emergency restrictions in Tokyo and other areas because of the COVID-19 pandemic.
China’s onshore yuan appreciated to as few as 6.358 per dollar CNH=D3 , a new three-year high. The dollar was last trading at 6.3616 yuan, down 0.15% for the day.
FOREX: US Dollar Slips after Currencies Traders Take Profits
