The U.S. dollar gained against its major rivals on Friday, buoyed by strong economic data.
An inflation reading preferred by the Federal Reserve showed an acceleration in the pace of price growth but not as much as traders had feared.
The reading on core consumer prices showed the pace of price growth accelerated to 3.1% in April from 1.9% in March. While the increase in prices exceeded economist estimates, the jump was apparently not as severe as to raised concerns about the Federal Reserve tightening monetary policy.
The Fed has attributed the recent increase in prices to “transitory factors” and has repeatedly hinted that it will not consider tightening until prices exceed 2% for “some time.”
Data from the Commerce Department showed that U.S. core personal consumption expenditures index rose 0.7% on month in April following a 0.4% increase in March. The PCE price index grew 0.6% in April, same as seen in the previous month.
Personal income plunged by 13.1% in April, after rising by a revised 20.9% in March. Economists had expected personal income to drop by 14.2%.
The University of Michigan’s consumer sentiment for the US was revised slightly higher to 82.9 in May of 2021 from a preliminary 82.8, matching market forecasts. The reading still pointed to the lowest consumer confidence level in 3 months.
The dollar index, which rose to 90.44 in the European session, later dropped to 89.98 before recovering to 90.07, netting a gain of about 0.11%.
Against the Euro, the dollar firmed to $1.2133 but pared gains and eased to $1.2192, netting just a marginal gain. The European Commission’s economic sentiment index strongly to 114.5 in May, up from 110.5 in April, and above expectations for a score of 112.1.
The Pound Sterling weakened a bit against the dollar, fetching $1.4192 a unit, compared with $1.4203 Thursday evening.
The Yen firmed to 109.85 a dollar, down just marginally, after having weakened to 110.20 earlier in the day.
The Aussie weakened against the dollar, losing more than 0.5% as the AUD-USD traded at 0.7707.
Against Swiss franc, the dollar was quite stronger, fetching CHF 0.8999, about 0.35% up from the previous close. Switzerland’s economic outlook remained very positive in May, driven by manufacturing and exports, survey data by the KOF economic institute showed Friday.
The KOF Economic Barometer climbed to a new record high of 143.2 point from 136.4 in April, which was revised from 134.0. Economists had forecast a score of 136. The reading is well above its long-term average.
The Loonie was weaker at C$1.2076 a dollar, down 0.08% from Thursday’s close.
The material has been provided by InstaForex Company – www.instaforex.com