Greenback headed for weekly gain, pound weakens to US$1.38

Business | 18 Jun 2021 4:45 pm

The US dollar was headed for its best week in nearly nine months on Friday. Rival currencies are struggling to shake the pressure exerted by the Federal Reserve's sudden hawkish shift in tone, Reuters reports.

With investors also scrambling to price in a sooner-than-expected tapering of extraordinary U.S. monetary stimulus, the euro and the yen failed to recoup losses of the last two days.

Hovering around US$1.19, the euro was flat against the dollar and on course for its worse week since October with a 1.6 percent fall. With a dovish European Central Bank seemingly far behind the Fed in the monetary policy cycle, traders will be reluctant to buy euros against dollars.

"The U.S. central bank is one step ahead and as a result USD is likely to remain well supported against the EUR", Commerzbank strategists said in their Daily Currency Briefing. "As no important data is due for publication today or at the start of next week, the FX market is likely to feel mainly the after-effects of the Fed meeting," they added.

With investors busy closing short positions since the Fed meeting, the dollar index hit a more than two-month high of 92.010, and is on track for a 1.6 percent weekly gain, its largest since September.

At 0810 GMT, the dollar index was up by 0.01 percent at 91.887.

The greenback is also on track for a 0.4 percent rise against the yen, which sat at 110.02 per dollar after hitting an 11-week low of 110.82. It was little moved by the Bank of Japan keeping its main policy settings steady, as expected.

Meanwhile the Australian dollar struck its lowest since December at US$0.7508 and the Kiwi fell to its weakest since April at US$0.6982, defying eye-popping reports on Australian jobs and New Zealand growth this week.

The UK pound fell by 0.24 percent to US$1.3894 and was headed for a weekly loss of 1.5 percent.

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