TOKYO Reuters - The US dollar fell against its major peers on Friday, on course for its first weekly decline this month as investors assess the path for Federal Reserve policy and whether aggressive rate hikes would trigger a recession.
The dollar index, which measures the dollar against six rivals, was down 0.07% to 104.33 in the Asian morning. It fell back from a 0.19% rise the previous day, which was mostly driven by a decline in the euro after weak European factory data reduced bets for European Central Bank tightening.
The dollar trading has been choppy this week, with markets betting on more cautious policy action from the Fed after another expected 75 basis point rate increase in July.
Fed Governor Michelle Bowman said on Thursday that she supports 50 basis point hikes for the next few meetings after July's. Fed chair Jerome Powell stressed the central bank's unconditional commitment to taming inflation even amid the risks to growth, even in his second day of the Congresional testimony.
The Treasury yields have weakened support for the dollar, with it sliding to a two week low on the 10 year note on the 10 year low overnight. The dollar fell by 0.1% to 134.795 against the yen, which is extremely sensitive to changes in U.S. yields. It was down about the same amount for the week, and set to snap a three-week, 6.19% winning streak.
The euro went up 0.11% to $1.0533, but fell 0.44% overnight after weaker than expected German and French PMI figures.
Germany triggered the emergency gas plan on Thursday in response to falling Russian supplies.
Interest-rate strategist Ken Crompton, National Australia Bank interest-rate strategist Ken Crompton said on a podcast that the market has started to trim a fair amount out of pricing for the next couple of ECB meetings.
There have been a couple of factors that have really added up, which has led to questions as to how far the ECB will be able to get into its tightening. The euro is up 0.44% against the dollar for the week.
The pound rebounded by 0.16% to $1.2281, putting it on track for a 0.5% weekly rise that would end a three-week losing run.
Australia's dollar went up 0.13% to $0.6904, but was still set for a 0.48% weekly decline, its third straight losing week.