Dollar on track for 4th weekly gain in a row after Fed policy update, Navarro comments


The U.S. dollar retained the upper hand versus its rivals on Friday, one day after the Federal Reserve kept rates unchanged but signaled that further interest-rate increases were on the horizon.

Comments from White House trade adviser, Peter Navarro, in which he called out Wall Street for pushing President Donald Trump toward a trade deal with China, pushed the dollar higher still. The trade narrative has been supportive of the buck, mostly because investors think an all-out trade war would be worse for U.S. partners, despite also being bad for the U.S.

The ICE U.S. Dollar Index

DXY, +0.28%

 was last up 0.2% to 96.928 on Friday, aiming for a 0.4% gain for the week, its fourth in a row.

The buck’s gains added on to a 0.8% rally on Thursday, in its best daily performance since August, according to FactSet data, in the wake of an “unambiguously hawkish Fed statement,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

The Fed Thursday left its key interest rates unchanged at 2%-2.25%, and said further rate increases would continue. The next increase is expected in December—the fourth of the year. Some market participants voiced concerns that the central bank didn’t address October stock-market volatility.


The Mexican peso

USDMXN, -0.2902%

 rallied late Friday, as President-elect Andrés Manuel López Obrador walked back some proposals banking regulation. Mexican banking stocks had suffered on Friday, after López Obrador’s Morena party proposed to cap fees.

One dollar last bought 20.1368 pesos, down from 20.1961 late Thursday.


Elsewhere, traders focused on economic data in the U.K., which saw trade balance and manufacturing data beat expectations, while third-quarter gross domestic product slid to 0.6% in the quarter from 0.7% previously, in line with forecasts. The data also showed that business investments retreated in the third quarter, which market participants attributed to the uncertainty around the U.K.’s planned exit from out of the European Union.

The British pound

GBPUSD, -0.6661%

 was weaker on the day, sliding to $1.2967 from $1.3061 late Thursday in New York.

“The price action in cable remains dominated by Brexit headlines as the Irish border issue continue to be the single biggest stumbling block to the deal,” said Schlossberg. Cable refers to the sterling-dollar currency pair.

Meanwhile, the conflict between the European Commission and Italy about the latter’s budget proposal remains in focus. Officials on both sides have been oscillating between affirming they want to reach a deal and reverting to a more obstinate stance. Brussels wants Rome to resubmit its budget proposal, which was deemed in conflict with EU budget rules. Italy’s first proposal saw an increase in government spending that would have pushed its budget deficit up.

The euro

EURUSD, -0.2552%

 last bought $1.1332, down from $1.1365 late Thursday in New York.


In other much anticipated data, China released consumer price and producer-price inflation numbers early on Friday, showing a slight dip to 3.3% in PPI versus the previous month’s read at 3.6%, but stability in CPI at 2.5%.

Friday’s release followed some buoyant trade numbers released on Thursday, although investors warned that the U.S.-China trade spat was distorting the figures, with investments coming ahead of increases in duties.

Read: Why no one is popping champagne over China’s buoyant export data

On top of that the People’s Bank of China said the economy was facing downward pressures.

Against that backdrop, the dollar was slightly stronger versus the yuan in, buying 6.9569 yuan

USDCNY, +0.3259%

 in Beijing, up 0.3%, and 6.9468 yuan

USDCNH, +0.1153%

 in the offshore market, up 0.% on Thursday.

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Source : MTV