The dollar American closed almost flat, although it added his eighth consecutive week of gainsdue to concerns about the economic resilience of USA and its possible impact on future decisions of the Federal Reserve.
The dollar index, which measures the price of the greenback against its main peers, remained stable at 105.05 points. It hit a six-month high reached in the previous session of 105.15 and gained 0.6% for the week.
The greenback posted its eighth consecutive week of gains, the longest streak since 2014.
Dollar, interest rates and the Federal Reserve
“This week the market has been a little more nervous than usual on several fronts and that lent itself to the strength of the dollar”said Amo Sahota, director of FX at consultancy Klarity FX in San Francisco.
Sahota mentioned the continued escalation of the conflict between the United States and China over the restrictions imposed by this country on the iPhone, which put Apple in the spotlight. He also noted that there is the idea that the Federal Reserve will keep interest rates higher for longer, since the battle over inflation is still being fought.
Yuan hits 16-year low
The Chinese yuan, for its part, closed the domestic session with the lowest price since 2007while fighting capital outflow pressures and the widening performance gap with major economies.
The euro, the largest component of the dollar index, had its eighth week of losses with a weekly decline of 0.7%. The price of the euro remained flat on the day at $1.0699, after falling to three-month lows on Thursday.
Data released this week showed the U.S. services sector unexpectedly gained momentum in August and jobless claims last week hit their lowest level since February, while in the euro zone, industrial production in Germany, the largest economy Europe, fell somewhat more than expected in July.
The odds of a Fed rate hike at the November meeting remained above 40%although the market expects the US central bank to keep interest rates stable at the end of the month.
The British pound moved away from Thursday’s three-month low at $1.2459, posting a weekly loss of 1%.
The local yuan hit its weakest level since December 2007 at 7.3510while its internationally traded pair sank to a 10-month low of 7.3665 per dollar.
The Chinese currency has continued to depreciate since February, as the faltering economic recovery after the pandemic and the widening yield gap with other economies, particularly the United States, affected capital flows and trade.
Meanwhile, the yen was also in the spotlight. The Japanese currency fell 0.3% to 147.6 units per dollar and was on the weaker side of the key level of 145 units that prompted Japan’s intervention last year.
Japanese Finance Minister Shunichi Suzuki said on Friday that rapid moves in the currency were undesirable and that authorities would not rule out any options against excessive swings, in a fresh warning to investors trying to sell the yen.
Source: Ambito
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