The dollar extended overnight losses on Friday after data on Thursday pointed to a slowdown in the U.S. economic recovery, while riskier currencies gained, with the Aussie and Kiwi dollars up.
Data released on Thursday showed that the number of people filing new claims for unemployment benefits fell less than expected.
Homebuilding also fell, after strong gains in the previous three months.
The dollar – which had been boosted by the Federal Reserve upgrading its 2020 economic forecast earlier this week – gave up these gains, and was down 0.1% at 0728 GMT, set for a weekly loss.
The Japanese yen gained against the dollar, holding close to the seven-week high hit on Thursday, at 104.610 JPY=EBS.
At its meeting, the Bank of Japan maintained its -0.1% short-term interest rate target and a pledge to cap 10-year bond yields around zero, as widely expected.
Noting that dollar-yen has passed the key 105 level, MUFG’s head of research for EMEA global markets, Derek Halpenny, wrote to clients that he expects the yen to grind higher.
“The prospect of the BoJ influencing the yen weaker is becoming a less likely scenario anyway given the actions taken since COVID leaves the BoJ with little further to do,” he said.
The New Zealand dollar was the biggest mover, gaining overnight and hitting its highest in a year and a half in early London trading, after the country’s finance minister sounded positive about the economy in television interviews.
“Given these optimistic comments and the ‘risk-on’ tone in stock markets in Asia this morning, I think we could see further gains in NZD,” Marshall Gittler, head of investment research at BDSwiss Group wrote.
The Reserve Bank of New Zealand meets next week. The governor has said that the policy rate will stay at 0.25% until next March.
At 0729 GMT, it was at 0.6788 versus the U.S. dollar, up 0.5% on the day NZD=D3.
The Australian dollar also gained, up 0.1% on the day AUD=D3.
The Norwegian crown benefited from oil prices rising for the fourth day straight, and was up 0.2% versus the U.S. dollar at 9.0330 NOK=D3.
The euro was up less than 0.1%, at $1.1855, set for minimal gains for the second week in a row EUR=EBS.
The pound was steady at $1.2981 and 91.285 pence per euro GBP=D3EURGBP=D3.
The currency fell sharply on Thursday when the Bank of England said monetary policymakers had been briefed on how to implement negative rates, but recovered later in the session.
The European Union’s Brexit negotiator said he thinks a Brexit trade deal with Britain is still possible.
– Reuters