The dollar fell against the euro on Friday due to weaker U.S. economic data, but it surged against the Japanese yen as BOJ governor Kazuo Ueda said inflation was too early to celebrate.
Bitcoin is marginally below its two-year peak on Wednesday. February factory employment hit a seven-month low as new orders plummeted. Construction spending fell in January despite predictions.
Goldman Sachs economists cut their first-quarter GDP estimate by 0.2 percentage points to 2.2% after the release. The dollar has rangebound as traders watch economic data for a U.S. Federal Reserve rate cut.
New York-based Bannockburn Global Forex chief market strategist Marc Chandler said “the U.S. is the key side of it,” pushing currency fluctuations. The dollar had looked poised to break higher in recent days, but Friday's fall prevented it.
The dollar index fell 0.23% to 103.87. The euro increased 0.31% to $1.0837. On Friday, euro zone inflation decreased last month but underlying prices rose, backing the European Central Bank's decision to retain interest rates at record highs until mid-year. Since November, investors have struggled to forecast when the ECB and Fed will decrease rates, putting the euro zone's currency between $1.07 and $1.11.
"We are seeking out fresh news," said Jane Foley, Rabobank FX strategist, "whether that’s going to come from the ECB (European Central Bank) and a change in expectations, or further alteration of the market’s view about the ability of the Fed to cut even in June."
The dollar rose against the yen after BOJ's Ueda said it was too early to assume inflation was near to the central bank's 2% inflation target and stressed the need to scrutinize wage data. “If we're right in expecting wage negotiations to lead to more signals that inflation is becoming more persistent in Japan, then we expect BOJ to exit negative interest rate policy,” said Bipan Rai, CIBC Capital Toronto's North American head of FX strategy.
On Friday, BoE senior economist Huw Pill said a first interest rate cut since the coronavirus pandemic was "some way off." Bitcoin climbed 1.4% to $62,320 from $63,933 on Wednesday, its highest level since Nov. 2021.
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