Dollar regains some ground but remains near recent lows
Dollar regains… The dollar regained some ground against the other major currencies on Friday, but it still remained within close distance of an eight-month low amid growing expectations for tighter monetary policies in Europe and the U.K.
EUR/USD slid 0.38% to 1.1398, just off the previous session’s 13-month peak of 1.1445, after Eurostat said consumer price inflation rose by an annualized rate of 1.3% in June, above expectations for an increase of 1.2% and following a final reading of a 1.4% advance in the prior month.
Core CPI, which excludes food, energy, alcohol, and tobacco costs, increased by 1.1% in June, after a 0.9% gain in the prior month. Analysts had expected core inflation to increase by 1.0%.
The euro strengthened broadly after European Central Bank President Mario Draghi indicated on Tuesday that the bank could soon start to unwind its quantitative easing program.
GBP/USD slipped 0.17% to 1.2985, still close to a six-week high of 112.19 overnight.
The U.K. Office for National Statistics reported on Friday that gross domestic product rose 0.2% in the first quarter, in line with expectations and a previous estimate. Year-on-year, the U.K. economy grew 2.0%.
A separate report showed that the U.K. current account deficit widened to £16.9 billion in the first quarter from £12.1 billion in the three months to December.
Analysts had expected the current account deficit to widen even more to £17.3 billion in the last quarter.
The pound strengthened broadly after Bank of England Governor Mark Carney said Wednesday that some removal of monetary stimulus is likely to become necessary as spare capacity in the economy erodes.
The BoE’s monetary policy committee was split 5-3 at its meeting earlier this month on whether to raise interest rates from a record-low 0.25%. Carney voted to keep rates unchanged.
Elsewhere, USD/JPY fell 0.28% to 111.87, while USD/CHF gained 0.30% to trade at 0.9587.
The Australian dollar was steady, with AUD/USD at 0.7684, while NZD/USD advanced 0.44% to 0.7332.
Earlier Friday, data showed that China’s official manufacturing purchasing manager’s index rose to 51.7 in June from 51.2 the previous month. Analysts had expected the index to slip to 51.0 this month.
Meanwhile, USD/CAD edged down 0.17% to trade at 1.2983.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.21% at 95.52, off a fresh eight-month low of 95.37 hit overnight.