Dollar set to snap 5-week losing streak as Fed cut bets pared
economic data pared bets for aggressive Federal Reserve interest rate cuts.
The euro languished close to a two-week low to the dollar as cooling inflation in Germany and Spain boosted the case for European Central Bank easing.
The yen held near the closely watched 145 per dollar level after weakening on Thursday, as the greenback tracked a rise in U.S. Treasury yields.
The Japanese currency largely ignored data on Friday showing core consumer prices in Tokyo climbing at a faster than expected 2.4% in August, again topping the Bank of Japan's 2% target, although a measure that also strips out energy costs rose by just 1.6%.
Overnight, U.S. data showed gross domestic product (GDP) grew a 3.0% annualised rate in the second quarter, an upward revision from the 2.8% rate reported last month. Economists polled by Reuters had forecast GDP would be unrevised.
«That's been the market mover from the price action overnight, particularly when you look at currencies and U.S. Treasury yields,» said Rodrigo Catril, senior FX strategist at National Australia Bank, referring to the GDP reading.
«The takeaway there — the highlight — is that the consumer was stronger than had previously been thought,» he added. «The exceptionalism of the U.S. was still evident in Q2.»
Traders now more strongly favour a quarter-point Fed rate reduction on Sept. 18, laying only 34% odds of a 50-basis point (bp) cut, down from 38% a day earlier, according to the CME Group's FedWatch Tool.
The U.S. dollar index — which measures the currency
