Investing.com – The US dollar fell in early European trading on Friday but headed for a third consecutive weekly gain on rising US rate hike expectations.
At the time of writing, which compares the greenback’s account against a basket of six other currencies, it fell 0.1% to 104.040, just short of Thursday’s two-month high, 104.31.
Despite small losses on Friday, the US currency is on course for a third-straight weekly gain of just under 1% as traders position themselves for a possible hike in US interest rates for a while. longer.
Data released on Thursday showed licenses rose only moderately last week to 229,000 units, while Q1 growth was revised up to 1.3%, from 1.1%.
Friday’s focus will be on the release of the , a closely watched inflation barometer, which the Federal Reserve will be keeping a close eye on ahead of its June policy meeting.
With inflation proving stable, expectations have risen for it to raise rates again in June, with futures traders splitting almost evenly between expecting a rate hike and a pause.
The dollar also received a boost this week, given its safe-haven status, from a lack of success in reaching an agreement to raise the US public debt ceiling by $31.4 trillion as the early June deadline approaches.
The two sides appear to be close to a deal, Reuters reported late Thursday evening, but any deal will need to be approved by the Republican-controlled House of Representatives and the Democrat-controlled Senate.
The pair rose to 1.0731, remaining close to a two-month low, even as currency officials hinted at further interest rate hikes to tame still high inflation.
“To ward off the specter of inflation, we in the Eurosystem have acted with determination,” said Bundesbank President Joachim Nagel on Thursday. “The Governing Council of the ECB will continue to follow this path of monetary tightening to overcome high inflation”.
The pair rose 0.2% to 1.2344 after UK bonds rose more-than-expected in April, rising 0.5% from March, above a 0.3% expectation and an improvement on declines by 1.2% from the previous month.
With the remains the highest in the G7, along with Italy, and consumer spending showing some resilience, it is likely to raise interest rates again next month.
The pair fell 0.2% to 139.78, just off a six-month high, after weaker-than-expected Friday data that boosted expectations that the Bank of Japan refrain from tightening your policy this year.
