Dollar shored up by strong U.S. data, commodity currencies sag
The dollar held firm on Friday after strong U.S. labour and inflation data soothed concerns about the world’s largest economy, while falling oil prices weighed on commodity-linked currencies such as the Canadian and Australian dollars.
The dollar index against a basket of six major currencies was steady at 97.166 after climbing 0.25 percent the previous day.
The index was headed for a weekly loss of 0.25 percent, having stumbled at the start of the week as Treasury yields fell in the wake of a mixed March U.S. non-farm jobs report.
Data released on Thursday showed first-time filings for U.S. jobless benefits dropped to a 49-1/2-year low last week, pointing to sustained labour market strength. Overall producer prices increased 0.6% in March, the largest rise since October.
The dollar was little changed at 111.72 yen after gaining 0.6 percent overnight on the robust U.S. data and the subsequent rise in U.S. Treasury yields.
The greenback’s advance, however, stalled ahead of the 112.00 yen threshold.
“Many market players had taken a bearish view on the dollar after the U.S. CPI numbers released earlier in the week, but they were forced to abruptly cover short positions as Thursday’s data proved to be strong,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.
“The rise thus lacked conviction and it remains to be seen if the dollar can sustain its bounce. The prospect of a rate cut by the Fed may have diminished in light of the data, but economic views are not yet strong enough to support rate hike expectations,” Kanda said.
The dollar had sagged on Wednesday after a mixed report on domestic consumer prices reinforced the notion that underlying U.S. inflation remains tame.
The pound was steady at $1.3053 after dipping 0.25 percent the previous day against the broadly firmer dollar.
Volatility for sterling plunged after a midweek deal at an emergency European Union summit to postpone Britain’s exit from the bloc to Oct. 31 meant it would not crash out this week without a treaty to smooth its passage.
The Canadian dollar was more or less steady at C$1.3385 per dollar after shedding 0.5 percent the previous day as crude oil prices retreated from five-month highs.
The Australian dollar dipped 0.1 percent to $0.7117 to extend losses from a day earlier, when it sank 0.7 percent.
A decline in copper prices and political uncertainty were also seen weighing on the Aussie.
Australian Prime Minister Scott Morrison on Thursday announced a general election to be held on May 18.
The New Zealand dollar, also sensitive to shifts in commodity prices, slipped to $0.6714, its lowest since Jan. 22.
The euro nudged up 0.1 percent to $1.1262 after losing 0.2 percent on Thursday. The single currency has risen about 0.4 percent this week.