By Peter Nurse
Investing.com – The U.S. dollar edged higher Friday, boosted by strength against the Japanese yen, while the euro pushed higher following the hawkish turn by the European Central Bank.
At 3 AM ET (0800 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 98.627.
rose 0.5% to 116.70, climbing to its highest level since January 2017, and up 1.5% this week, its biggest weekly gain since October.
This move follows Thursday’s release of data showing that surged 7.9% year-over-year in February, the largest annual increase in 40 years.
Both the and the have policy meetings next week, but while this inflation release all but confirms the Fed will tighten monetary policy in the form of an interest rate hike, the BOJ is set to retain a dovish monetary policy.
edged higher 0.1% to 1.0984, the day after the European Central Bank announced it would be speeding up its plans to tighten monetary policy, phasing out all of its asset purchases in the summer if inflation fails to come down fast enough.
Still, while the euro is higher, it has struggled to retain most of the gains seen after the announcement.
“By ending asset purchases sooner than anticipated, the central bank is taking the dangerous step of tightening in the face of slowing growth. Even [ECB President Christine] Lagarde said the risks to growth are to the downside,” said Kathy Lien, an analyst at BK Asset Management.
Analysts from Goldman Sachs stated on Thursday that they expect economic output in the Eurozone to actually shrink in the second quarter, citing the region’s proximity to the war in Ukraine.
ABN Amro now has a base case of EUR/USD falling to parity or even below for the first time in about two decades, with the supply disruptions to key commodities disproportionately hitting the euro area economy and delaying European Central Bank tightening.
Elsewhere, was flat at 1.3081, despite Britain’s economy rebounding much more than expected in January, with climbing 0.8% on the month in January after a 0.2% decline in December.
The policymakers meet next week and were already widely expected to hike interest rates once more, even before this stronger than expected data.
lost a little ground on Friday, down 0.2% to 0.7345, after the recent strong rally due to higher commodity prices.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.