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The dollar held steady versus the yen on Friday but was on track for a second weekly loss after the US Federal Reserve’s dovish comments last week prompted traders to scale back bullish bets on the greenback.
The dollar last traded at 119.17 yen, little changed on the day. The dollar is down about 0.7 per cent versus the yen for the week after falling 1.1 per cent last week, when the Fed signalled a more cautious outlook for US economic growth.
On Thursday, the dollar had staged a rebound from a one-month low of 118.33 yen, getting a boost from some encouraging US data and a rise in U.S. Treasury yields.
Janet Yellen’s speech
Market participants were cautious about taking aggressive positions in the run-up to a speech by Fed Chair Janet Yellen later on Friday.
The dollar is likely to see some range-trading against the yen for now, said Stephen Innes, senior trader for FX broker OANDA in Singapore, adding that levels near 119.40-119.50 yen may serve as near-term resistance.
The euro held steady at $1.0881, well below Thursday’s intraday high of $1.10525.
“The inability of EURUSD to hold tests above $1.10 also supports our expectation that longer-term-oriented market participants are keen to sell the currency at better levels,’’ analysts at BNP Paribas wrote in a research note to clients.
“We think low and falling real rates are likely to keep euro zone and Japanese investors focused on selling their currencies into rallies, and we expect the USD to benefit.’’
US economic data
Providing welcome relief for dollar bulls, data on Thursday had showed the number of Americans filing new claims for jobless benefits fell more than expected last week. A separate report showed activity in the services sector hit a six-month high in March.
Two Fed officials also said the central bank should remain on track to raise interest rates later this year despite the economy’s weak start to the year.
The dollar held steady against a basket of major currencies to 97.402, having pulled up from Thursday’s three-week low of 96.170.
The dollar index, which measures the greenback’s value against a basket of major currencies, was down 0.5 per cent on the week after its 2.4 per cent drop last week.
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