Dollar Trims Gains But Remains Supported

Dollar Trims Gains But Remains Supported
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(February 23, 2018) The U.S. dollar trimmed gains against other major currencies on Friday, but expectations for several U.S. rate hikes this year continued to support demand for the greenback.

The greenback remained broadly supported after the minutes of the Federal Reserve’s January policy meeting showed that central bank officials see increased economic growth and rising inflation as justification to continue to raise interest rates gradually.

The dollar had been pressured lower recently by expectations for a faster pace of monetary tightening outside the U.S., which would lessen the divergence between the Fed and other central banks.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.18% at 89.82 by 08:13 a.m. ET (12:13 GMT), just off a one-and-a-half week high of 90.17 hit on Thursday.

The euro remained lower, with EUR/USD down 0.26% at 1.2298, while GBP/USDadded 0.23% to 1.3986.

Official data earlier showed that euro zone consumer price inflation rose 1.3% year-over-year in January, in line with expectations.

On a monthly basis, consumer prices slipped 0.9% last month, also in line with expectations.

Elsewhere, the yen was steady, with USD/JPY at 106.74, while USD/CHF gained 0.31% to 0.9355.

The Australian and New Zealand dollars were lower, with AUD/USD down 0.28% at 0.7823 and with NZD/USD declining 0.69% to 0.7291.

Meanwhile, USD/CAD was almost unchanged at 1.2696.

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