The dollar is slowly depreciating; Great benefits after a solid sales pitch with Investing.com
Investing.com – The US dollar rose on Friday, but remained under pressure after the Federal Reserve’s key interest rate cut, while sterling rose sharply after healthy UK sales data.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 100.480, but remained just above a 12-month low.
The dollar is fighting for buyers
The US dollar is struggling to find friends after the Federal Reserve began its rate-cutting cycle with a 50 basis point reduction to a range of 4.75% to 5%.
Markets indicate a 40% chance the Fed will cut another 50 basis points in November and have 73 bps in its rate by the end of the year. Rates are seen at 2.85% at the end of 2025, which is now assumed to be the Fed’s neutral rates.
“But the big market question right now is whether the dollar is ready to break out of its two-year range,” ING analysts said in a note. “There doesn’t seem to be anything on the agenda today that justifies the breakout, but suffice it to say that we are in the camp of looking for a strong sell-off if the DXY support levels at 99.50/100 agree.”
Sterling is rising this week
In Europe, it rose 0.2% to 1.3312, while the pound rose more than 1% this week to its highest since March 2022.
Data released earlier on Friday showed Britain rose by a stronger-than-expected 1% in August and growth in July was revised up to 0.7%, from the previous estimate of a 0.5% month-on-month increase.
The kept its key interest rate at 5% on Thursday, after starting its easing with a 25-bp cut in August.
traded 0.1% higher at 1.1163, up nearly 1% on the week and within striking distance of August’s peak of 1.1201.
Rates were cut for the second time this year last week, but there is a degree of uncertainty about when the next move will be.
fell less than expected in August, down 0.8% on the year, below expectations for a 1.0% decline.
Yen slips after BOJ meeting
rose 0.7% to 143.62 after interest rates stabilized, and said inflation and economic growth are expected to pick up gradually.
The BOJ’s decision and forecast came just hours after consumer price index data showed inflation rose to a 10-month high in August, as rising wages fueled private consumption.
While the yen lost each week, it remains close to its strongest levels of 2024, hit earlier in the week.
traded 0.2% lower at 7.0538, after the People’s Bank of China kept its rate unchanged, rejecting further expectations that it will cut rates again to stimulate the economy.
The PBOC’s decision came as several recent economic indicators showed continued weakness in China.
