King Dollar crucified as weak data recedes inflation fears; Pound jumps 0.80%

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King Dollar crucified as weak data recedes inflation fears; Pound jumps 0.80%

On Friday, the American Dollar dwindled against most major and emerging market currencies, paring some of its earlier gains stemming off two weeks of strong run, as an unprecedented pause in US retail sales last month coupled with a US Fed remark to cling on to its accommodative monetary policy had eased off inflation fears.

Apart from that, the safe-haven American currency, widely contemplated as a hedge against higher inflation alongside US Treasury bond notes, shed roughly half a percentage point, paring nearly all of its gains made over the week following release of a 12-year peak Consumer Prices Index alongside a robust rise in Purchasing Prices Index.

Nevertheless, in the day’s sharp downward spiral in US Dollar Index was largely prompted by a pause in US retail sales in April as beforementioned, while US Commerce Department said on Friday that US retail sales remained unchanged last month following a 10.7 per cent upsurge in March, handing out a feasible cause to the investors to step up their bets on riskier assets.

Apart from that, a US Fed pledge that it would keep interest rates low despite a sharp shoot-up in inflation indicators, added to further strains on the greenback.

US Dollar plunged after dismal data

Citing statistics, in the day’s FX market wind-down, the US Dollar Index, measured against six major currencies on an average, tumbled 0.47 per cent to 90.30, while the bloc’s single currency euro, shared among 19 eurozone member states, gained 0.53 per cent to $1.214 and the British Pound jumped 0.80 per cent in the week over bets on a solid economic recovery.

On the week, the US Dollar Index rose 0.08 per cent. In tandem, against the safe-haven Japanese yen, the greenback fell 0.09 per cent to 109.34 yen per Dollar, while Swiss Franc rose 0.42 per cent to $0.9010 against its American counterpart.

Meanwhile, forecasting further headwinds ahead for the US Dollar, a senior economist at Capital Economics, Jonas Goltermann wrote in a client note, “The prospects for monetary policy normalisation remain key. Minutes from the April FOMC meeting, released on Wednesday, may provide some further clues as to policymakers’ intentions in that regard.