The dollar dipped on Friday from seven-week highs struck against the euro and the yen this week as a rebound in global stock and commodity prices lured funds away from the US currency.
Data the previous session showing solid US regional manufacturing activity relieved doubts about the outlook for US and global growth, helping riskier assets recover from their sharp sell-off since mid-May. Asian stock indexes jumped more than 2 percent across the board, with Japan's Nikkei share average lunging more than 3 percent at one point. Gold surged around $15 to $583.25.
Such renewed confidence in the US and global economy may take a toll on the dollar, which had benefited from investors moving funds into safer havens such as US money markets and government bonds, analysts said.
Volatility in global stocks and commodities markets this week has left investors wary of taking big positions on the dollar despite high expectations that the Federal Reserve will raise rates at the end of the month. Fed Chairman Ben Bernanke on Thursday added to a string of recent hawkish comments from top central bank officials, saying that a quickening in inflation warranted monitoring, although he added that the impact of high energy costs on other prices has been limited so far.
The dollar faces a test from data on the US current account deficit, which has nagged the currency for years on worries about the country's ability to attract capital and fund the gap. The dollar inched down to 114.70 yen from 114.75 yen in late New York and off this week's peak of 115.45, the strongest since late April. Some traders said the dollar was unlikely to fall below 114 yen in the near term.
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