BLK

FOREX-Dollar higher on safety bid as data spurs growth worries

Credit: REUTERS/Dado Ruvic

By Saqib Iqbal Ahmed

NEW YORK, June 23 (Reuters) - The dollar rose against the euro on Friday after dismal business activity data from around the globe soured risk sentiment and as hawkish comments from central banks added to pressure on riskier currencies.

The overall picture, though, indicated U.S. economic growth ticked up a notch in the second quarter even as worries persist that the Federal Reserve's aggressive interest rate increases over the past year will trigger a recession.

Earlier in the session data showed euro zone business growth virtually stalled in June. A downturn in manufacturing deepened, while activity in the bloc's dominant services sector barely expanded, as overall demand fell for the first time since January.

"We're starting to see signals from businesses that the demand is starting to ease up at the margin and that's leading to recalibration of expectations of what future output looks like," said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.

"I do think that the concern with the future outlook is weighing on risk appetite right now and the dollar is catching somewhat bid off of that," Rai said.

Friday's data arrived after rate hike surprises and hawkish comments from central banks globally which have renewed market fears that policymakers have further to go in tightening policy to tame inflation, even at the risk of tipping their economies into a recession.

Data out on Friday showed that Japan's core consumer inflation exceeded forecasts in May and an index excluding fuel costs rose at the fastest annual pace in 42 years, putting pressure on the BOJ to phase out its massive stimulus.

The pound was down 0.30% on Friday at $1.271, on pace to finish the week down about 1%, its largest weekly loss in six weeks.

The Australian and New Zealand dollars struggled on Friday as traders avoided riskier currencies.

In cryptocurrencies, bitcoin BTC=BTSP rose 3.46% to a 1-year high of $30,924, on pace for a near 17% gain for the week, its best weekly gain since mid March, boosted by BlackRock's BLK.N plan to create a bitcoin exchange-traded fund.

World FX rates https://tmsnrt.rs/2RBWI5E

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Rae Wee and Farouq Suleiman; Editing by Muralikumar Anantharaman, Andrea Ricci and Grant McCool)

((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 332 219 1971; Reuters Messaging: saqib.ahmed.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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