SINGAPORE: The dollar fell in tandem with U.S. Treasury yields on Friday after downside surprises on U.S. economic data this week cemented bets of more Federal Reserve rate cuts this year.
The week started out with a mix of market tailwinds headlined by a U.S.-China trade truce which propelled the dollar higher, though the euphoria soon fizzled out and left currencies trading sideways.
Most of the action in the foreign exchange market came from the dollar’s moves against the South Korean won, where it fell sharply for two straight days on news that Washington and Seoul discussed the dollar/won market earlier this month.
The dollar last traded 0.14% lower at 1,394.70 won .
“Speculation is once again mounting that President Trump favours a weaker dollar, potentially pressuring other governments to allow their currencies to appreciate in trade negotiations,” said George Vessey, lead FX and macro strategist at Convera.
“Asian currency weakness against the dollar has long been seen as an advantage for regional exporters, a stance the administration has sought to challenge.”
In the broader market, the dollar was struggling to regain its footing after an overnight slide following data which showed U.S. producer prices unexpectedly fell in April.
The PPI figures came on the heels of a tame consumer price reading earlier in the week, cementing bets that the Fed is likely to cut rates at least twice this year.
The euro was up 0.1% to $1.1197 while sterling steadied at $1.3309.
