Concerns about slower global growth prospects and political tensions boosted dollar’s safe-haven appeal. Dollar snapped two-week losing streak.
The greenback erased earlier losses and rose on Friday after investors cut back short positions.The dollar weakened after the Federal Reserve cut interest rates by a quarter-point on Wednesday. The currency’s decline was compounded by a spike in overnight U.S. repo rates that cut into demand for dollars.
Other major central banks, including the Bank of England, the Bank of Japan and the Swiss National Bank, left rates unchanged this week, disappointing some dollar bulls.
But the slowdown in global growth and increased tensions following the weekend attacks on Saudi oil facilities were making the dollar more attractive, despite a dovish policy stance from policymakers.
The dollar rebounded 0.1% against an index of other currencies to 98.39, ending a two-week losing streak. It had fallen 0.1% in early London trading. Sterling was briefly the biggest gainer against the dollar before profit taking ahead of the weekend pulled the British pound lower.
European Commission President Jean-Claude Juncker said on Thursday he thought Brussels could reach agreement with Britain on its departure from the European Union.
START TRADINGForex – Slower global growth weighs on dollar
Markets focused on U.S.-China trade talks in Washington, taking place ahead of high-level discussions next month. Some signs of progress were emerging.
The Canadian dollar weakened against its U.S. counterpart on Friday as the greenback broadly climbed and domestic data showed that retail sales rose less than expected in July. At 9:28 a.m. (1328 GMT), the Canadian dollar was trading 0.2% lower at 1.3285 to the greenback
The Australian dollar rose to $0.6799 but remained near the three-week low it reached on Thursday.
The New Zealand dollar fell to $0.6285, its weakest since Sept. 3.
Sterling rose 0.5% to a two-month high against the dollar and to a four-month high against the euro of 87.87 pence in the early trading. But then gave up its gains to trade broadly flat on the day.
Oil was supported by rising Middle East tensions after a key Saudi Arabian supply hub was knocked out in an attack last weekend. U.S. crude oil futures were up 1.50% at $59 a barrel.
Gold edged higher on Friday, heading for its first weekly rise in four. Investors focused on Middle East tensions while palladium hit a record peak on short supply. Spot gold was up 0.1% at $1,500.47 an ounce at 1314 GMT, up about 0.8% over the week.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money