Berita 24 English - The dollar strengthened against a basket of currencies on Friday, boosted by upbeat US manufacturing data, but remained...
Berita 24 English - The dollar strengthened against a basket of currencies on Friday, boosted by upbeat US manufacturing data, but remained on track for a weekly loss as traders' concerns about taper talk in US Federal Reserve minutes eased.
The dollar has given back much of the advance it made following a mention in the minutes of the Federal Reserve's April monetary policy meeting of possible future discussions on reducing stimulus, which raised hopes for an earlier start to US interest rate hikes than previously anticipated.
"It would appear that taper concerns have waned rather quickly," Shaun Osborne, Scotiabank's chief currency strategist, wrote in a note.
The dollar gained some support after data showed that factory activity in the United States increased in early May, owing to strong domestic demand.
The dollar index, which compares the greenback to a basket of six currencies, increased 0.222 per cent to 89.993. The index, which earlier in the session hit a four-month low, was on track for a weekly loss of 0.4 per cent.
Some strategists remain sceptical that the Fed will quickly reverse its accommodative stance.
"We continue to anticipate a weakening of the USD while US yields remain contained," Osborne said.
Nonetheless, continued improvement in US data, particularly in comparison to Europe, is likely to bolster the bull case for the dollar, according to other analysts.
"The latest flash PMIs confirm our view that the US economy will continue to grow faster than the eurozone economy in the coming years," said Simona Gambarini, Capital Economics' markets economist.
"This reinforces our forecast that long-dated yields will rise faster in the former than in the latter and that the euro will weaken against the dollar," Gambarini said.
A relaxation of COVID-19 restrictions aided German services and French business activity surveys in May, although they had little effect on the euro on Friday.
The dollar is on the verge of a weekly decline, https://fingfx.thomsonreuters.com/gfx/mkt/dgkvloelrpb/dxy.png.
The British pound fell 0.2 per cent on Friday. Still, it was on track for a third consecutive week of gains against the dollar, aided by a series of data releases reiterating market expectations for a robust economic recovery in the United Kingdom.
Meanwhile, bitcoin fell on Friday as China stepped up its efforts to prevent speculative and financial risks by cracking down on bitcoin mining and trading.
Bitcoin fell 11.5 per cent to $35,952.05 per coin. Ether fell 14.3%.
