The dollar fell today, Friday, but it is still heading towards achieving the longest series of weekly gains in 9 years, supported by a set of strong data on the US economy that also made the prospects for the Federal Reserve ending the cycle of raising interest rates in question.
The Chinese yuan also fell in local transactions to its lowest level since 2007 in light of its exposure to pressure from capital outflows and widening yield gap with major economies.
The dollar index, which measures the performance of the US currency against a basket of major currencies, fell 0.1% to 104.93 points, but remained close to its highest level in 6 months, which it recorded in the previous session, at 105.15 points.
The index is heading to expand its gains for the eighth week in a row, with an increase of 0.6% so far.
The euro saw losses for 8 consecutive weeks, but rose in the latest trading 0.1% to 1.0709 dollars, after falling to its lowest level in three months at 1.0686 dollars yesterday, Thursday.
“The relative divergence between the US and European economies becomes a major theme again and the story of the dollar’s decline has faded recently,” said Dean Sikoff, chief macro and foreign exchange economist at Nordea Markets.
Data released this week showed that the US services sector unexpectedly gained momentum in August and that jobless claims last week reached their lowest level since February.
In the Eurozone, industrial production in Germany, the largest economy in Europe, fell slightly more than expected in July.
The pound sterling rose from its lowest level in 3 months yesterday, Thursday, and reached in the latest trading at $ 1.2496, although it is still heading for a weekly loss of more than 0.7%.
The yuan in transactions within China reached 7.3400 against the dollar at the opening today, Friday, and reached its lowest level since December 2007 at 7.3510 against the dollar, and it also declined in foreign transactions and fell to its lowest level in 10 months at 7.3621 against the dollar.
The value of the Chinese currency has fallen steadily since February as the faltering economic recovery after the COVID-19 pandemic and the widening yield gap with other economies, especially the United States, affected capital and trade flows.
The yen settled at 147.37 against the dollar.
The Australian dollar rose 0.2% to $0.6392 in latest trading, but was set to post a weekly loss of 1%.
Likewise, the New Zealand dollar is heading to record a loss of approximately 0.7% during the week, and it was traded in the latest trading at $0.59.