The U.S. dollar index retreated from a 20-year high on Friday as investors took profits, but fears of slowing global growth and expectations of tough monetary policy from the Federal Reserve helped boost the greenback Demand, the dollar index rose nearly 5% this month, the best monthly performance in seven years.
In late New York trading, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against a basket of major currencies, fell 0.40% to 103.21, up 1.97% for the week and 4.64% for the month, the largest monthly gain since 2015.
In terms of economic data, the U.S. personal spending in March was higher than expected, and the monthly increase in the PCE price index was the highest since 2005. After the data was released, the dollar once recovered some of its losses.
Fed funds futures predict that by the end of the year, the federal funds rate will rise from the current 0.33% to 2.83%, but some analysts believe that the market has already priced in the news of the Fed’s aggressive tightening policy, which may weigh on U.S. bond yields and the dollar future rise.
China’s Beijing on Friday announced the closure of more businesses and residential areas and stepped up contact tracing to prevent the outbreak from spreading further, while Shanghai has been under lockdown for a month and public dissatisfaction has grown.
Vassili Serebriakov, currency strategist at UBS, said the strength of the U.S. dollar index is mostly related to market concerns about the global cycle, and risk aversion is positive for the dollar, but there are some exceptions, such as the dollar-yen exchange rate.
The Bank of Japan reaffirmed its commitment to maintaining ultra-easy monetary policy on Thursday, vowing to defend its yield target with unlimited bond purchases, sparking a fresh wave of yen selling.
After falling below the 131 mark yesterday (28th), the yen rebounded from a 20-year low against the US dollar on Friday, rising 0.77% to 129.83 yen, down nearly 6% this month.
The dollar’s retreat came as the euro rose 0.41% to $1.0541, down 4.5% for the month, its biggest drop since January 2015.
Sterling was also up 0.94% at $1.2571, down 4.1% for the month, its biggest drop since October 2016.
As of Saturday (30th) Taiwan time about 6:00 Price:
- The dollar index was at 103.2106. -0.4401%
- The euro/dollar (EUR/USD) exchange rate was quoted at $1.0541 per euro. +0.3905%
- The pound against the dollar (GBP/USD) was quoted at $1.2571 per pound. +0.9232%
- The Australian dollar against the US dollar (AUD/USD) was quoted at $0.7063 per Australian dollar. -0.5071%
- The U.S. dollar against the Canadian dollar (USD/CAD) traded at 1.2856 Canadian dollars. +0.3983%
- The U.S. dollar was quoted at 129.83 yen against the Japanese yen (USD/JPY). -0.7795%
