Dollar index falls to five-week low

June 28, 2014

New York (June 28)  The dollar on Friday posted weekly losses against major rivals, with a popular gauge of the currency’s strength falling to its lowest level in more than five weeks.
The ICE dollar index  DXY -0.24% , which pits the greenback against six other currencies, fell 0.39% for the week from $80.331 to $80.0410 on Friday. That’s the lowest level since May 21, according to FactSet data. The WSJ Dollar Index  DXY -0.24%   , an alternate gauge of dollar strength, fell to 72.74 from 73.07 a week ago.

Data this week included a sharper-than-expected revision to the economy’s first quarter contraction, which showed the economy shrank by 2.9% in the period. That could be viewed as reaffirming the Federal Reserve’s commitment to keeping interest rates low even after the end of its bond-buying program later this year. Higher interest rates should boost the U.S. dollar, as foreign investors are compelled to buy the currency in order to scoop up higher-yielding dollar-denominated assets.

The dollar  USDJPY -0.3418%    fell 0.69% to ¥101.42 Friday from ¥102.07 a week ago after a slew of economic data. Household spending dropped by an adjusted 8% in May from a year earlier, missing expectations. Japan’s core consumer price index for May rose 3.4% from a year ago, meeting forecasts. And the unemployment rate inched down to 3.5% from 3.6% in April. Read more: Japan has a date with data

The euro  EURUSD +0.2692%    moved up 0.24% to $1.3630 from $1.3597 a week ago. Annual inflation in Germany, the euro zone’s largest economy, rose to 1% in June. The inflation data are harmonized in order to compare with other countries in the European Union. The tick higher in German inflation could give the European Central Bank some breathing room as it fights to stave off deflation.

Source: MarketWatch

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