Dollar to Post Weekly Loss, Euro Outlook Bullish
A Bloomberg gauge of the dollar rose on Friday but traded on course for its first weekly loss in three. The euro options outlook remains bullish as traders continue to reduce their bets on a final European Central Bank interest-rate cut this year.
The Bloomberg Dollar Spot Index gains 0.3% intraday but is set for a 0.6% loss for the week.
Investors take stock of President Donald Trump’s comments that firing Federal Reserve Chairman Jerome Powell wasn’t necessary, easing some worries around the central bank’s independence.
EUR/USD is little changed at 1.1746 and up 1% on a weekly basis; in options, topside premium stands between 35-65 basis points across the curve.
Swaps imply just over a 50% chance of another quarter-point reduction by the end of the year, having fully priced such an outcome earlier this week.
Banks including Goldman Sachs Group Inc., Commerzbank AG and Royal Bank of Canada have scrapped calls for one more interest-rate reduction by the ECB.
GBP/USD down a second day, drops 0.5% to 1.3436.
UK retail sales barely grew in the second quarter even as sizzling temperatures spurred spending in June.
EUR/GBP up 0.5% to 0.8742, fresh high since November 2023; short-gamma desks seen chasing the move above 0.8700, two Europe-based traders say.
USD/JPY gains 0.4% to 147.56, paring advance seen after data showed Tokyo inflation slowed for a second month.
Bank of Japan officials see the possibility of mulling another interest rate hike this year after the US and Japan struck a trade deal this week, according to people familiar with the matter.
EUR/JPY up a fourth day, rallies by as much as 0.5% to fresh one-year high at 173.61.
Source: Bloomberg
