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Dollar poised for weekly losses, Fed's inflation caution drags

11/24/2017, 9:53:08 AMBasics of Trading
Dollar poised for weekly losses, Fed's inflation caution drags

 The dollar wobbled in thin trading on Friday, on track for losses against most rivals in a holiday-shortened week as it remained under pressure on the Federal Reserve's cautious view on low U.S. inflation

U.S. markets were closed for the Thanksgiving holiday on Thursday, which was also a national holiday in Japan.

On Wednesday, the dollar skidded even after minutes from the Federal Reserve's latest policy meeting cemented expectations for an interest rate hike next month, as some policymakers fretted about stubbornly weak inflation.

The dollar index, which tracks the U.S. unit against a basket of six major rival currencies, was down 0.1 percent at 93.156 (DXY), and 0.5 percent lower for the week.

The dollar edged up 0.1 percent against the yen to 111.33 , pulling away from Thursday's two-month low of 111.07 yen, though it was still down 0.6 percent for the week.

"Hedge funds that close their books this month have been taking profits on their dollar-long positions," said Mitsuo Imaizumi, Tokyo-based chief foreign-exchange strategist for Daiwa Securities.

"This has kept the dollar under pressure, and combined with thin liquidity from the holiday, it would be hard for it to climb this session," he said.

The low-yielding yen, which tends to gain as a perceived safe haven in times of market risk aversion, was also underpinned by concerns about a precipitous tumble in Chinese stocks in the previous session.

The CSI300 index (CSI300) shed 3.0 percent on Thursday, its biggest decline in almost a year and a half, on concerns about a selloff in Chinese bonds as investors reacted to the latest government curbs to reduce financial risks.

The euro was steady at $1.1849 , not far from last week's one-month high of $1.1862. For the week, it was up 0.5 percent.

The single currency got a boost from European business surveys, which pointed to a strengthening growth outlook for the region. Figures tracking both the services and manufacturing industries in Europe were better than expected.

Sterling edged down 0.1 percent to $1.3298, though it was 0.7 percent higher for the week and remained close to Thursday's six-week high of $1.3337 ahead of British Prime Minister Theresa May's visit to Brussels later on Friday for Brexit talks.