Dollar slides as market bets on rates staying low


Shutterstock photo - - The dollar traded largely lower against most major currencies on Friday as markets shrugged off hawkish comments from a Federal Reserve official and bet that benchmark interest rates will stay low well into 2015.

In U.S. trading on Friday, EUR/USD was up 0.25% at 1.3645.

The dollar fell on Friday after markets bet the Federal Reserve will keep interest rates low for some time to come.

On Thursday, St. Louis Federal Reserve President James Bullard told Fox Business Network that an improving economy may make conditions ripe for interest rates to rise possibly in early 2015.

The dollar rose initially on the news, though investors digested Bullard's comments and took them in stride, as he is a known inflation hawk and is a non-voting member of the Federal Open Market Committee, which allowed for profit taking on Friday despite positive U.S. data.

The revised Thomson Reuters/University of Michigan consumer sentiment index rose to 82.5 in June from 81.2 in May, beating expectations for a 82.2 reading.

In the euro zone, preliminary data on Friday showed that German consumer price inflation rose 0.3% this month, more than the expected 0.2% gain, after a 0.1% fall in May.

A separate report showed that Spain's CPI rose at an annual rate of 0.1% in June, compared to expectations for a 0.3% rise, after a 0.2% increase in May.

Official data earlier showed that French consumer spending rose 1% in May, exceeding expectations for a 0.4% gain, after a 0.2% fall in April, whose figure was revised from a previously estimated 0.3% decline.

The dollar was down against the yen, with USD/JPY down 0.33% at 101.39, and down against the Swiss franc, with USD/CHF down 0.28% at 0.8911.

In Japan, official data earlier showed that household spending dropped by an annual rate of 8.0% last month, compared to expectations for a 2.0% decline, after a 4.6% fall in April.

Data also showed that Tokyo core consumer price inflation, which excludes food, remained unchanged at an annual rate of 2.8% in June, in line with expectations.

In addition, a government report showed that Japan retail sales fell 0.4% in May compared to a year earlier, less than the expected 1.8% decline and after a 4.4% drop in April.

The greenback was up against the pound, with GBP/USD down 0.04% at 1.7019.

The Office for National Statistics said U.K. gross domestic product expanded by 0.8% in the first quarter, in line with market expectations.

A separate report showed that the U.K. current account deficit narrowed to £18.5 billion in the three months to April, from £23.5 billion in the fourth quarter of 2013 whose figure was revised down from a previously estimated deficit of £22.4 billion.

Analysts had expected the current account deficit to narrow to £17.5 billion in the first quarter.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.24% at 1.0663, AUD/USD up 0.05% at 0.9420 and NZD/USD down 0.07% at 0.8774.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.21% at 80.10. offers an extensive set of professional tools for the financial markets.
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This article appears in: Investing Forex and Currencies
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