The dollar fell slightly on Friday after two straight days of gains, as prices for energy and other commodities retreated from an upward run.
Oil prices fell around 2% on Friday, after a partial resumption of exports from Kazakhstan’s CPC crude terminal eased supply concerns, while the European Union remained divided on the advisability of imposing an oil embargo on Russia. The war in Ukraine and the resulting rise in commodity prices have aggravated already rising inflation.
“Everything in these commodity markets, everything is done in dollars, so as we’re seeing a bit of a pullback here in commodity prices, that’s going to coincide with a bit of softness for the dollar,” analyst Edward Moya said. market leader. , at Oanda in New York. “Until we have a major geopolitical development, you will probably only see instability from now on.”
The dollar index fell 0.112%, with the euro up 0.18% at $1.1016. Economic data indicates that rising prices and interest rates are beginning to weigh on economic activity.
The National Association of Realtors said on Friday its pending home sales index, based on signed contracts, fell 4.1% in February, its fourth consecutive month of decline and below expectations for a gain of 1%. The housing market has cooled following a shortage of properties, while high house prices and rising mortgage rates could continue to undermine demand. The University of Michigan’s March final reading of consumer sentiment slipped to 59.4, below the estimate of 59.7 and February’s final reading of 62.8, while its index of one-year inflation expectations was at its highest since November 1981.
Even with Friday’s drop, the greenback is poised for a solid gain this week, which would mark its sixth weekly gain in the past seven. The dollar benefited from its safe haven status and the conflict in Ukraine fueled expectations of an interest rate hike by the US Federal Reserve. Following other analysts raising expectations for a more aggressive Fed, Bank of America said Friday it expects two hikes of 50 basis points each at its June and July meetings with investors. “risks” that these will be postponed to May and June respectively.
Citi also revised its Fed policy path upward for rate hikes, expecting 50 basis point hikes at meetings in May, June, July and September this year. The euro rose slightly on Friday, but was on pace for a slight weekly decline, and worries about a slowing economy were likely to keep it in a tight range.
German business morale deteriorated in March due to worsening supply chain problems stemming from high gasoline prices and a shortage of drivers, according to a survey released on Friday. The Japanese yen strengthened 0.28% against the greenback to 121.99 per dollar after hitting a new low at 122.43, the weakest in over 6 years, while the pound sterling last traded at $1.3201, up 0.14% on the day.
The yen came under pressure as the Bank of Japan had to keep its monetary policy loose, unlike most other central banks around the world.
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