Dollar up slightly after consumer confidence data, CPI monitored by Reuters

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By Chuck Mikolajczak

NEW YORK (Reuters) -The dollar rose on Friday after a U.S. consumer confidence reading as investors digested a series of comments from Federal Reserve officials, with the focus beginning to shift to key inflation figures next week.

The dollar pared the declines and edged modestly higher after the University of Michigan’s preliminary reading of consumer confidence for May came in at 67.4, a six-month low and below the 76.0 estimate of economists polled by Reuters. Moreover, one-year inflation expectations rose from 3.2% to 3.5%.

The dollar had weakened Thursday after a higher-than-expected reading of initial jobless claims fueled expectations that the labor market would loosen, adding to other recent data that suggested the overall economy was slowing.

The , which measures the dollar against a basket of currencies, rose 0.09% to 105.31, while the euro fell 0.08% to $1.0772. The dollar was on track for its first weekly gain after two straight weeks of declines.

Next week, investors will turn their eyes to inflation in the form of the Consumer Price Index (CPI) and the Producer Price Index (PPI), as well as retail sales data.

“I don’t think the CPI will change people’s minds; price pressure is still high, but it will be a decline, it will just be a softer value on a year-over-year basis,” said Marc Chandler, head of the firm. market strategist at Bannockburn Global Forex in New York.

“So it’s not so much about size, but about direction.”

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The dollar was also supported by comments from Dallas Federal Reserve President Lorie Logan, who said it was not clear whether monetary policy was tight enough to bring inflation back to the US central bank’s target of 2% , and that it was too early to cut interest rates.

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That ran counter to earlier comments from Raphael Bostic, president of the Atlanta Federal Reserve, who said the Fed likely remained on track to cut rates this year even as the timing and extent of policy easing were uncertain. In addition, Austan Goolsbee, president of the Chicago Federal Reserve, said he believes U.S. monetary policy is “relatively restrictive.”

The comments capped a week of differing opinions among Fed officials on whether interest rates are high enough.

Following last week’s softer-than-expected US payrolls report and a Fed policy announcement, markets have priced in a cut of around 50 basis points (bps) this year, with a 62.2% chance of at least a 25 basis point cut in September. to CME’s FedWatch tool.

Against the Japanese yen, the dollar strengthened 0.26% to 155.86 and rose about 1.9% against the Japanese currency this week after falling 3.4% last week, the largest weekly percentage decline since early December 2022 after two suspected interventions by the Bank of Japan.

Japanese Finance Minister Shunichi Suzuki said on Friday that the government would take appropriate foreign exchange measures if necessary, echoing recent comments from other officials.

The British pound rose 0.02% to $1.2525, after previously reaching $1.2541, in the wake of data showing the UK economy grew by the most in almost three years in the first quarter of 2024, ending emerged from the superficial recession it entered in the second half of last year.

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