The dollar firmed on Friday after two days of declines but was still on track for its fifth straight weekly gain as investors scaled back expectations for Federal Reserve rate cuts, while the yen was anchored around the key 150 per dollar level.
The dollar had come under pressure after mixed U.S. data, with retail sales falling more than expected in January, while a separate report underscored labour market tightness.
The dollar index , which measures the U.S. currency against six major rivals, was up 0.1% at 104.33 on Friday, having eased around 0.6% the two previous days. The index is on course to eke out a 0.23% gain for the week, its fifth in a row.
Federal Reserve chair Jerome Powell remarks early this month and strong U.S. data has quashed expectations of early and deep rate cuts from the Fed.
Traders are now pricing in a 53% chance of a rate cut in June, according to the CME FedWatch tool, while had initially priced in March as the starting point of the Fed's easing cycle.
They expect 100 basis points (bps) of cuts this year, much lower than the 160 bps priced in at the end of 2023.
The euro was down 0.04% to $1.0769, set for a small decline in the week and not far from the three month low of $1.0695 it touched earlier this week.
The Japanese yen weakened 0.22% to 150.24 per dollar, hovering around the 150 mark, a level that puts the market on alert for possible intervention by Japan to support its currency as well as comments from officials.
The Australian dollar eased 0.08% to $0.65195, while the New Zealand dollar is down 0.16% to $0.60965.
Source: Reuters
