THE US dollar climbed on Friday (Jul19) and was set to snap a two-week streak of declines as a worldwide cyber outage that affected banks, airlines and broadcasters unnerved investors, although volatility in the currency markets was largely contained. The crippling outage highlighted the risks of a global shift towards digital, interconnected technologies.
The dollar index was on track for its second straight daily advance, its first in two weeks, to put the greenback on pace for its first weekly gain in three.
“It’s perhaps a result of the selling pressure earlier in the week, and at the tail end of last week, seeming rather over-done, particularly when one considers that US economic growth remains firm, and that while the Fed are set to cut in September, easing will still be relatively synchronised across G10 central banks,” said Michael Brown, market analyst at Pepperstone in London.
“Of course, the earlier tech issues may have sparked a bit of a flight to safety too, causing some knee-jerk dollar buying earlier in the day, with that strength then continuing into the afternoon session.”
The dollar index gained 0.24 per cent at 104.39 and was up 0.3 per cent on the week.
The Federal Reserve is scheduled for its next policy announcement at the end of July. Markets expect only a slight chance for a cut of at least 25 basis points, while almost completely pricing in a cut at its September meeting, according to CME’s FedWatch Tool.
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The yen, however, was up for the week against the greenback after suspected official buying last week from Japanese authorities, and another suspected intervention from the Bank of Japan earlier in the week.
Against the yen, the dollar strengthened 0.07 per cent at 157.48 on the session, oscillating between gains and losses on the session after data showed inflation in Japan picked up for a second month. The greenback was off 0.24 per cent on the week against the Japanese currency.
The yen has fallen more than 10 per cent against the dollar this year, largely due to the wide difference in interest rates between the US and Japan, and hit 38-year lows at the beginning of the month, spurring action from Tokyo.
The euro was down 0.16 per cent at US$1.0878 and set to snap a two-week win streak, a day after the European Central Bank kept rates steady, as was widely expected and gave no insight into its next move.
Sterling weakened 0.25 per cent at US$1.2909. For the week, it is off 0.6 per cent and set to snap a three-week streak of gains. REUTERS
