By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar edged lower against the Japanese yen and euro Friday, but remained on track for weekly gains as traders reevaluated a Federal Reserve meeting that left markets anticipating earlier policy rate hikes than initially expected.
Against the yen USDJPY -0.01% , the dollar slipped to ÂĄ102.31 from ÂĄ102.39 late Thursday, but is on track to gain 0.8% this week.
The euro EURUSD +0.21% rose to $1.3798, from $1.3781 Thursday. Nonetheless, it’s on pace to fall 9% on the week.
The ICE dollar index DXY -0.14% , which measures the greenback against a collection of its rivals, was down at 80.084, versus 80.187 in the prior session. The WSJ Dollar index XX:BUXX -0.17% , another gauge of the U.S. currency’s strength, was down at 73.58, compared with 73.67 on Thursday.
Stocks traded higher, while benchmark Treasury yields inched lower.
The Fed’s summary of economic projections on Wednesday showed central bankers expect to increase the target policy rate, now anchored near zero, slightly sooner and faster than initially projected. That came amid a central bank decision to shift the way it communicates its intention to keep rates low.
In a press conference afterward, Chairwoman Janet Yellen added that rate hikes could come roughly six months after the central bank finishes winding down its bond-buying stimulus program, which is expected to be completed before the year’s end.
Against the yen USDJPY -0.01% , the dollar slipped to ÂĄ102.31 from ÂĄ102.39 late Thursday, but is on track to gain 0.8% this week.
The euro EURUSD +0.21% rose to $1.3798, from $1.3781 Thursday. Nonetheless, it’s on pace to fall 9% on the week.
The ICE dollar index DXY -0.14% , which measures the greenback against a collection of its rivals, was down at 80.084, versus 80.187 in the prior session. The WSJ Dollar index XX:BUXX -0.17% , another gauge of the U.S. currency’s strength, was down at 73.58, compared with 73.67 on Thursday.
Stocks traded higher, while benchmark Treasury yields inched lower.
The Fed’s summary of economic projections on Wednesday showed central bankers expect to increase the target policy rate, now anchored near zero, slightly sooner and faster than initially projected. That came amid a central bank decision to shift the way it communicates its intention to keep rates low.
In a press conference afterward, Chairwoman Janet Yellen added that rate hikes could come roughly six months after the central bank finishes winding down its bond-buying stimulus program, which is expected to be completed before the year’s end.
The dollar initially strengthened on the news Wednesday, but cut back its gains Thursday as traders reassessed the Fed’s hawkishness, and continued to slip Friday.
“The USD is again weaker – with many arguing quietly that Yellen is a newbie leader and her message was mangled more than planned. The key will be in what Fed speakers say going forward and that starts today,” said Robert Savage, chief strategist at FX Concepts, in a note.
Markets are looking to the Fed speakers for insight into whether the initial hawkish interpretation of Yellen’s rate-hike comments was in fact what the central bank intended to communicate.
Minneapolis Fed President Narayana Kocherlakota, who was the lone dissenter to the Fed’s rate-hike language shift, explained that he disagreed with his colleagues in the last meeting because new guidance weakens a commitment to increasing low inflation.
Also on the calendar, St. Louis Fed President James Bullard will speak at the Brookings Institution at 11:45 a.m. Eastern and participate on a panel at 2:15 p.m. Fed Gov. Jeremy Stein speaks at 7:20 p.m. Former Fed Chairman Ben Bernanke presents a paper on Abenomics at 10 a.m. Chicago Fed President Charles Evans will deliver opening remarks at a conference.
