Greenback up slightly after consumer sentiment data

THE greenback inched higher on Friday (May 10) following a reading on US consumer sentiment as investors sorted through a batch of comments from Federal Reserve officials, with the focus beginning to turn towards key inflation readings next week.

The US dollar pared declines and turned modestly higher after the University of Michigan’s preliminary reading on consumer sentiment came in at 67.4 for May, a six-month low and below the 76 estimate of economists polled by Reuters. In addition, the one-year inflation expectation climbed to 3.5 per cent from 3.2 per cent.

The dollar had weakened on Thursday after a higher-than-expected reading on initial jobless claims fuelled expectations the labour market was loosening, adding to other recent data that indicated the overall economy was slowing.

The dollar index, which measures the greenback against a basket of currencies, gained 0.09 per cent to 105.31, with the euro down 0.08 per cent at US$1.0772. The dollar was on track for its first weekly gain after two straight weeks of declines.

Next week, investors will eye readings on inflation in the form of the consumer price index and producer price index as well as retail sales data.

Against the Japanese yen, the dollar strengthened 0.26 per cent to 155.86. It was up about 1.9 per cent on the week against the Japanese currency after it tumbled 3.4 per cent last week, its biggest weekly percentage drop since early December 2022 after two suspected interventions by the Bank of Japan.

Sterling edged up 0.02 per cent to US$1.2525, after earlier reaching US$1.2541, in the wake of data showing Britain’s economy grew by the most in nearly three years in the first quarter of 2024, ending the shallow recession it entered in the second half of last year.