Dollar Set For Weekly Gain On Trade Optimism
The U.S. dollar weakened slightly on Friday, but was on track for a weekly gain as trade tensions eased and the Federal Reserve indicated it was in no hurry to cut interest rates.
At 4:30 a.m. ET (08:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 100.275, but remained on track for a weekly gain of about 0.4%.
Dollar set for weekly gain The U.S. central bank kept its benchmark interest rate unchanged at 4.25%-4.50% on Wednesday, as widely expected, but Chairman Jerome Powell stressed the high level of uncertainty.
He said it was unclear whether the economy would resume its steady pace of growth, or wilt under rising uncertainty and a possible spike in inflation.
The comments have led market participants to reduce the likelihood of a Fed rate cut in the near term, with forecasts for a June rate cut shifting to around 17% from around 55% a week ago.
The dollar also benefited from news of a trade deal between the U.K. and the U.S., especially ahead of the start of negotiations between Chinese and American diplomats over the weekend.
"Markets welcomed the first U.S. trade deal since Liberation Day, although the U.K.-American deal is not a game changer for either country," analysts at ING said in a note.
"The dollar benefited from Trump shifting to market-calming mode, but it will likely need more positive trade developments, particularly in China, to continue to recover."
Source: Investing.com
