Dollar index flat for the week, but greenback makes big jump on yen
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch)—The dollar turned down against major currencies Friday after a government report on inflation was seen as giving policy makers more reason to maintain ultra-accommodative monetary measures.
The ICE dollar index DXY -0.33% , which tracks the U.S. unit against a basket of major currencies, turned down to 80.012, off from 80.255 before the data and compared to 80.158 late Thursday.
The move erased the index’s week-to-date gain, though it’s still up 1.6% since the beginning of March.
The euro EURUSD +0.29% fetched $1.3128, up from $1.3086 earlier and $1.3097 in late North American trade on Thursday.
Against the Japanese yen, the dollar USDJPY +0.15% bought ÂĄ83.68, off its high of ÂĄ83.94 but up from ÂĄ83.40 Thursday.
The greenback has gained 2.3% on the yen this week, pushing its year-to-date advance to more than 10%.
The British pound GBPUSD +0.64% extended gains to $1.5807, up from $1.5672.
For the week, the euro is little changed as the dollar has gained 0.8% against the pound.
The dollar gave up modest gains against the euro after a report showed that the U.S. consumer price index excluding food and energy rose a less-than-forecast 0.1% for February. Overall, inflation at the retail level rose 0.4% on the month, roughly in line with forecasts. Read more on February CPI.
The lower core level allows the Federal Reserve to maintain its ultra-accommodative monetary policy for longer, so the data are “just what the Fed likes to see,” said Kathy Lien, director of currency research at GFT.
Analysts also noted that the euro has some support from technical levels.
“At levels close to $1.30, the market seems to have little appetite for lower euro-dollar levels,” said analysts at Commerzbank..
The dollar-yen exchange rate has been more closely influenced lately by a dramatic rise in U.S. Treasury yields, on the heels of Tuesday’s statement from the Fed was viewed as more upbeat, while U.S. economic data surprised to the upside.
Higher yields can boost a currency as investors shift into that currency for bigger returns.
The yen pared gains as U.S. yields cut their rise. Ten-year Treasury notes 10_YEAR +2.72% yielded 2.33%, off from 2.36% before the data.
