Photo: Dado Ruvic
Photo: Dado Ruvic

Dollar surge cools

By Patrick Graham Time of article published May 22, 2015

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London - The dollar edged lower on Friday but remained on course for its first week of gains against the euro and a basket of major currencies since the start of April ahead of inflation numbers later in the day.

A 4-cent gain in two days at the start of the week restored faith in the US currency's year-long rally, after a month of falls. But its immediate future continues to depend on data on the world's biggest economy improving after a disappointing few months.

The Philly Fed survey of sentiment on Thursday prompted some profit-taking by those who bought the dollar earlier in the week. Dealers said there might be little appetite for another big move ahead of UK and US public holidays on Monday.

The yen was up around a quarter of a percent on the day as Bank of Japan Governor Haruhiko Kuroda spoke following a BOJ meeting that gave a slightly more upbeat view of the economy.

The dollar traded half a percent lower against the euro at 1.1163. Against a basket of currencies it was just 0.2 percent off at 95.040.

“The US CPI today might provide some daily noise, but in general I think we're heading into a more range-bound environment,” said Alvin Tan, a strategist with French bank Societe Generale in London.

“The speech later today by (Federal Reserve President) Janet Yellen might be interesting. But really the Fed is in waiting mode, we think they will raise rates in September but they are unlikely to make that decision in the next month or two.”

In Europe, Germany's often market-moving Ifo data is due at 08h00 GMT, while there was little sign at an EU summit of the breakthrough in talks on Greece that its prime minister says it is close to.

European Central Bank President Mario Draghi also addresses an ECB Forum on “Inflation and Unemployment in Europe”.

The dollar index is up 2 percent on the week, putting it on track for its first weekly gain in six. Analysts said the index's inability to break above its 100-day moving average, currently around 95.620, was keeping a lid on the dollar.

The dollar was down 0.2 percent at 120.82 yen, compared to around 120.90/95 just ahead of the BOJ announcement. For the week it is up more than 1 percent against the yen.

“I think there is a sense that it might be better to buy (the dollar) since the downside was solidly supported and it looks as if it is starting to break higher on charts,” said a trader for one Japanese bank in Tokyo.

“But it's not as if an immediate rise to 125 yen seems likely,” he said.


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