The British pound advanced against the U.S. dollar after a surprise drop in U.S. retail sales led traders to scale back expectations for a September Federal Reserve interest rate increase.
Most Asian currencies advanced against the U.S. dollar as recent economic data lowered expectations for further Federal Reserve interest rate hikes. The Japanese yen notably strengthened despite a report showing the country's economic growth slowed more than anticipated.
A sustained move above the 160 mark in the dollar-yen pair without intervention would erode confidence in Japan's policy resolve and could send the currency tumbling toward 165, according to BofA Securities.
The Canadian dollar strengthened to its highest level against the U.S. dollar in two months, buoyed by positive domestic manufacturing data and an unexpected decline in U.S. retail sales.
The Reserve Bank of India is closing a special forex swap facility for banks a month ahead of schedule following a successful campaign that attracted over $50 billion in foreign currency inflows.
The British pound rose against the U.S. dollar on Friday, driven by shifting market expectations for the Federal Reserve's interest rate policy. The move reflects broader dollar weakness, which also boosted the euro, as traders await further signals from Fed officials.
UBS analysts have set a new target of 1.425 for the USD/CAD currency pair, citing an expected divergence in interest rate policy that favors the U.S. dollar in the near term.
German government bond yields diverged this week, with short-term debt pressured by rising oil prices and domestic inflation while long-term bonds rallied on signs of cooling U.S. price pressures.
Asian currencies broadly strengthened and the dollar eased after unexpectedly flat U.S. producer price data for July reduced market expectations for a September interest rate hike by the Federal Reserve.
