The dollar headed for weekly losses on Friday, wallowing at its lowest levels against the euro in nearly two years after what markets perceived as hawkish talk from European Central Bank chief Mario Draghi.
But the Australian dollar skidded against the greenback after contrastingly dovish comments from a Reserve Bank of Australia official.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, was flat on the day at 94.322, not far from its overnight low of 94.090, its deepest nadir since August 2016. It was down 0.9% for the week.
The euro caught its breath and steadied at $1.1626 after climbing as high as $1.1659 on Thursday, its loftiest level since August 2015.
Draghi said that no exact date had been set for discussing any changes to the ECB's ultra-easy monetary program but did say policymakers would revisit the topic in the autumn.
His comments were perceived as "hawkish, even though the ECB didn't tip its hand as to when it will begin balance sheet normalization and in fact left the door open to additional easing if needed," said Bill Northey, chief investment officer at U.S. Bank Private Client Group in Helena, Montana.
The dollar edged up 0.1% against the yen to 112.06 , after touching an overnight low of 111.48, its lowest since June 27. It was on track to shed 0.4% for the week.
The euro crept 0.1% higher against its Japanese counterpart to 130.32 yen, within sight of last week's high of 130.76 yen, its highest since February. It was on track to gain 1% for the week.
The dollar's losses against the yen were mitigated by market expectations that the Bank of Japan will keep its massive stimulus program in place far longer than other major central banks amid stubbornly weak inflation.
On Thursday, the BOJ kept monetary policy steady as expected and postponed the timeframe to achieve its ambitious inflation target for a sixth time, though it slightly raised its economic growth forecasts.
Concerns over low inflation will likely keep the Federal Reserve from raising U.S. rates at its policy meeting next week, analysts said.
Fed Chair Janet Yellen signaled caution in her congressional testimony last week, with disappointing U.S. inflation and retail sales data a week ago adding to evidence that the central bank has reason to take its time in tightening even as it has vowed to do so.
U.S. President Donald Trump's failure to garner enough support for his healthcare bills in the Senate this week also weighed on the dollar, as it raised fears about similar obstacles in passing his stimulus and tax reform agendas.
The Australian dollar plunged after a top central banker said on Friday that the Reserve Bank of Australia doesn't need to follow the leader when it comes to global monetary tightening.
The Aussie tumbled 0.9% to $0.7889 after falling as low as $0.7875 earlier.
The New Zealand dollar added 0.4% to $0.7423 after rising as high as $0.7429, its highest level since September 2016, after New Zealand Finance Minister Steven Joyce told Bloomberg in an interview that he was not worried about the strength of the local dollar. (Reuters)
Source: www.businessworld.ie
