The Dollar is Worried Before Inflation Data

The dollar retracted in Asia Friday, June 25 as a deal on infrastructure spending in the US boosted appetite for riskier currencies, but the cautious mood ahead of key US inflation data kept losses to a minimum.

The risk-sensitive Australian and New Zealand dollars rose slightly, while the euro gained 0.1% to $1.1940 and the yen increased by the same margin to 110.80 per dollar.

Such limited moves kept the dollar’s recent gains unchanged, after it rallied following a sudden shift in policy expectations by the US Federal Reserve, which last week signaled earlier-than-expected rate hikes.

Inflation data due later today will provide the latest indication of how much pressure the Fed is under to act, as will labor market numbers due next week, leaving dealers reluctant to sell the dollar heavily if it rebounds soon.

In Asia, sentiment in the financial markets was supported by a mixture of fear-easing comments made yesterday by New York Fed President John Williams and hopes for a massive infrastructure spending plan in the US, which helped the riskier currencies.

The New Zealand dollar rebounded above its 200-day moving average to 0.7070 US dollars, but it is still below the February peaks above 74 cents. The Australian dollar rose 0.1% to $0.7591.

Bitcoin rose to 34,650 dollars and is heading for a limited weekly loss, after recovering from most of the decline recorded below the 30 thousand dollar level.