Written by Joyce Nzomo
The U.S. dollar went up a little on Friday as traders prepared for next week’s big Federal Reserve meeting, where the Fed is expected to cut interest rates for the first time in nine months.
The dollar gained 0.2% to trade at 147.53 yen, its third week of increases. It was also supported by a joint U.S.-Japan statement saying exchange rates should be set by the market and not allowed to move too wildly.
Even with the small rise, the dollar index which measures the dollar against other major currencies was almost unchanged at 97.59 and is still heading for a second straight week of slight losses. Analysts say the dollar’s long-term outlook remains weak because
of expected U.S. rate cuts and continued selling by foreign investors.
U.S. economic data also pointed to some weakness. A report from the University of Michigan showed consumer confidence dropped in September to its lowest level since May. On Thursday, figures also showed the biggest jump in jobless claims in four years,
signaling cracks in the job market.
Investors now believe the Fed will cut interest rates by 0.25% on September 17. Earlier, there were expectations of a bigger 0.50% cut, but those bets have cooled.
The 10-year U.S. Treasury yield rose to 4.06% on Friday, after briefly falling below 4% the day before for the first time since April.
In other currencies, the euro stayed flat at $1.1736. The European Central Bank kept its main rate unchanged at 2% this week, with President Christine Lagarde saying the euro zone economy looks more balanced. Credit rating agency Fitch is expected to give its review of France’s finances soon.
The British pound was steady at $1.3564 after data showed the UK economy did not grow in July. The Australian dollar slipped slightly to $0.6651, though it remains close to a 10-month high.
Courtesy of Reuters
