Dollar stumbles on interest rate fears

The US dollar fell against major currencies on Friday, on track for its first weekly loss this month, as investors continue to assess Federal Reserve policy and whether large interest rate increases will lead to a recession.

The safe-haven US currency also lost support amid improving market sentiment, rising regional bourses and rising riskier currencies such as the Australian and New Zealand dollars.

The dollar index, which measures the performance of the US currency against six rival currencies, fell 0.2 percent to 104.19 in Asia, after rising the previous day by 0.19 percent, which was mostly driven by the decline in the euro after weak PMI data in Europe reduced bets on a sharp increase in interest rates. by the European Central Bank.

The dollar has seen volatility this week, and markets are now betting on more cautious actions from the Federal Reserve following another expected 75 basis point interest rate increase in July. The dollar index fell by 0.42 percent during this period.

Fed Member Michael Bowman said Thursday she supports a 50 basis point interest rate increase in the “next few” meetings after the July meeting. conditional on fighting inflation even in light of the risks to growth.

Recession fears dragged down US Treasury yields overnight, limiting a key support for the dollar, with 10-year bond yields dropping to a two-week low.

The dollar fell against the yen 0.2 percent to 134.66, and the Japanese currency is very sensitive to changes in US yields. Over the course of the week, the dollar fell 0.25 percent against the yen and is expected to break a streak of 6.19 percent gains over three weeks.

The euro rose 0.22% to $1.05435, but fell by 0.44% overnight after weaker-than-expected PMI numbers for Germany and France.

Germany also launched the “alert phase” of its emergency gas plan on Thursday in response to the decline in Russian supplies.

Despite this, the euro gained 0.52 percent during the week against the dollar.

The British pound rebounded 0.14 percent to $ 1.22785, which puts it on track to achieve a weekly rise of 0.48 percent that would end a three-week losing streak.

The Australian dollar rose 0.28 percent to $0.6914, but it is on its way to a weekly decline of 0.32 percent, incurring losses for the third consecutive week. As for the New Zealand dollar, it rose 0.4 percent to $0.6302, trimming its weekly losses to 0.19 percent.