Singapore, April 14 (BNA): The dollar headed for its longest weekly losing streak in nearly three years on Friday, as traders raised expectations for an imminent end to the US Federal Reserve’s rate-raising cycle after signs emerged of possible inflation. cooling.
Data on Thursday showed that US wholesale prices, as measured by the producer price index, fell by the most in nearly three years last month, a day after data showed that the consumer index — the CPI — also fell as expected, Reuters reported.
The dollar index, which tracks the performance of the greenback against six others, fell to a near one-year low of 100.78.
It last settled at 101.0, and was headed for a weekly decline of more than 1%, its biggest drop since January. This marks a fifth straight weekly loss, and is the longest stretch since July 2020.
“The CPI hike was close to expectations, so it’s an important market reaction to what was somewhat of a consensus result and I think that’s a measure of how negative the dollar is at the moment,” Adam Cole, chief currency strategist at RBC Capital Markets said. .
“It’s hard to fight that, even if you really don’t agree with it, and we don’t agree with it,” he said.
RBC Capital Markets year-end target is $1.03 for the euro/dollar pair, which was trading on Friday around $1.1061, up 0.1% on the day and at a one-year high.
Among the G10 currencies, investors hold the most bearish position for the dollar against the euro.
Weekly data from the Commodity Futures Trading Commission shows that money managers collectively held long positions worth $19.631 billion in the euro, while holding short positions against the yen, British pound, Canadian, Australian, New Zealand and Swiss francs.
“The easiest way to express a negative view of the dollar was with the euro,” said Ray Attrell, head of foreign exchange strategy at the National Australia Bank.
The next data point for investors is monthly US retail sales at 1230 GMT, which will give direction for how the US consumer has weathered the turmoil in the banking sector that has collapsed two regional lenders and destroyed stocks in others.
Economists polled by Reuters expect retail sales to have fallen 0.4% in March compared to February.
The pound reached a 10-month high of $1.2545 earlier in the day, and was last down 0.3% to $1.2492. Against the euro, it fell 0.3% to 88.48 pence.
Money markets are pinning a 69% chance of the Fed raising interest rates by 25 basis points next month, although a series of cuts is also being priced in from July through the end of the year, which would see rates at 4.3% in December, compared with the range. 4.75-5.00% now.
Atlanta Fed President Raphael Bostick told Reuters in an interview Thursday that another 25 basis point increase would allow the Fed to end the cycle of rising interest rates with some confidence that inflation will steadily return to its 2% target.
He said recent inflation data, including this week’s reports of slowing consumer price increases and lower producer price inflation, “consistent with us moving again.” “We have a lot of momentum that suggests we’re on our way to 2%.”
Meanwhile, an unexpected rise in Chinese exports, combined with Australia’s strong March employment report, put the Australian dollar on track for a 1.5% gain this week. It was last down 0.1% at $0.6775. The Australian and New Zealand dollars are often used as more liquid proxy for the Chinese yuan.
The New Zealand dollar fell 0.3% to $0.6281, after jumping 1.3% on Thursday.
The Japanese yen held steady, leaving the dollar at 132.59, while the offshore yuan rose 0.3% to 6.8515 per dollar.