Comments from Fed Chairwoman Janet Yellen in the wake of the Fed’s March decision referenced an approximate six-month period between the end of the Fed’s bond buys and the first interest-rate hike, suggesting that a tightening in policy could come sooner than had been expected. Higher rates would boost the dollar.
But the release of the Fed minutes on Wednesday pushed back on that idea, spurring dollar losses. To a large extent, the Fed minutes suggested that the market may have been off-base in beginning to price in a rate hike sooner than previously expected.
The dollar rose to ¥101.69 from ¥101.49 late Thursday, but posted a weekly loss of 1.5%. The Euro was steady at $1.3886, for a weekly gain of 1.3%.
Data released Friday showed U.S. producer prices rose by more than expected last month, with details in the report hinting at a possible buildup in inflationary pressure that is desired by the Federal Reserve. The producer-price index, which measures wholesale inflation, rose by a seasonally adjusted 0.5% in March, beating economist expectations of a 0.1% gain.Separately, a gauge of consumer sentiment hit a nine-month high.
The ICE dollar index , which measures the dollar’s strength against six rivals, was at 79.492 versus 79.411 late Thursday. The WSJ Dollar Index , another gauge of dollar strength, edged up to 72.69 from 72.61.
The Fed looks at employment and inflation in determining monetary policy, with continued levels of low inflation cited by Fed Chairwoman Janet Yellen as one reason for maintaining accommodative policy . If there were signs inflation were approaching target sooner, the market might begin to doubt the credibility of that claim,but still far away from inflation being at that point.
Data supporting potential upward pressure in prices could boost expectations that the Fed could tighten policy sooner than expected. The consumer-price index for March is scheduled for release next week.
The British pound fell to $1.6736 from $1.6784. The pound was weighed on by a 2.8% decline in construction output in February from January.The Australian dollar fell to 93.95 U.S. cents from 94.13 U.S.