The dollar settled on Friday as traders consider the impact of stronger-than-expected economic growth data on the Federal Reserve’s interest rate decisions and await key inflation data later in the day for further evidence.
Official data showed that the US Gross Domestic Product (GDP) increased at an annual rate of 3.3% in the last quarter, surpassing expectations of a 2.0% growth. The data also indicated a decline in inflationary pressures.
According to Charu Chanana, Head of Currency Analysis at Saxo Singapore, the recent data on gross domestic product renewed hopes for a soft landing of the US economy. However, the bond market focused more on the element of inflation decline in the report, which caused yields to decrease.
The dollar index, which measures the performance of the US currency against a basket of major currencies, hovered around 103.53 during Asian trading hours after rising by about 0.2% overnight.
The revenues of US Treasury bonds with a 10-year maturity fell to 4.11%.
The dollar has increased by approximately 2% since the beginning of the year as market expectations regarding US interest rate cuts have decreased compared to the end of last year.
The euro fell in the latest transactions to 1.08385 dollars but remained above the six-week low of 1.08215 dollars touched yesterday, Thursday.
As expected, the European Central Bank maintained its monetary policy at its meeting yesterday, despite traders increasing their bets that the bank would cut interest rates starting from April.
The British pound fell by 0.10% during the day, trading near 1.2698 dollars. The Bank of England will announce its decision on interest rates next Thursday.
And the yen settled in the latest trading at 147.77 against the dollar.
According to today’s data, it was revealed that the core inflation in the Japanese capital slowed down to 1.6% in January compared to the previous year, which is lower than the central bank’s target of 2%.
