The U.S. dollar fell against the other major currencies on Friday and the dollar index posted its largest weekly decline since late October as optimism cooled over President-elect Donald Trump’s economic policy proposals.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.29% to 101.17 late Friday.
For the week, the index shed 1.0%, marking its worst weekly performance since late October.
The index had risen earlier Friday after upbeat U.S. retail sales data bolstered the economic outlook.
The Commerce Department reported that retail sales rose 0.6% in December, while November’s sales were revised up to show a 0.2% increase.
But the dollar retraced gains amid uncertainty over the incoming Trump administration’s plans for fiscal stimulus, deregulation and tax cuts.
The dollar fell sharply on Wednesday and hit five week lows against the euro, yen and Swiss franc on Thursday as Trump disappointed traders who had been hoping he would address economic and fiscal policies in his first formal news conference as U.S. president-elect.
The dollar index rallied to 14-year peaks earlier this month on expectations that Trump's policies would spur growth and inflation and prompt the Federal Reserve to raise interest rates more quickly.
Trump will officially take office on January 20.
USD/JPY was down 0.14% at 114.53 late Friday and the pair was down 2.23% for the week, its worst week since late July.
The euro also pushed higher, with EUR/USD at 1.0644 in late trade, after touching an intra-day low of 1.0596 following the U.S. retail sales report. For the week, the euro gained 1.08% against the dollar.
Sterling edged higher; with GBP/USD easing up 0.12% to 1.2174 but remained under pressure ahead of a speech on the U.K.'s Brexit plans that Prime Minister Theresa May will make on Tuesday.
In the week ahead, financial markets will continue to focus on U.S. President-elect Trump ahead of his inauguration on Friday.
Investors will be looking ahead to Tuesday’s keenly anticipated Brexit speech and Thursday’ policy announcement by the European Central bank.
China’s data on fourth quarter growth will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 16
U.S. financial markets will be closed for Martin Luther King Day.
Bank of England Governor Mark Carney is due to speak at an event in London.
Tuesday, January 17
New Zealand is to release private sector data on business confidence.
The U.K. is to release data on inflation.
The ZEW Institute is to report on German economic sentiment.
New York Fed President William Dudley is to speak at an event in New York and the U.S. is also to release the Empire state manufacturing index.
U.K. Prime Minister Theresa May is due to speak about starting proceedings for Britain’s exit from the European Union.
Wednesday, January 18
The U.K. is to publish its monthly jobs report.
The euro zone is to release revised data on inflation.
The U.S. is to publish figures on inflation and industrial production. Later in the day, Fed Chair Janet Yellen is to speak at an event in San Francisco.
The Bank of Canada is to announce its latest monetary policy decision and hold a press conference to discuss the economic outlook.
Thursday, January 19
Australia is to publish its monthly employment report.
The ECB is to announce its latest monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi.
Canada is to report on manufacturing sales and foreign securities purchases.
The U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to speak at an event in Stanford.
Friday, January 20
China is to release data on fourth quarter growth as well as figures on industrial production.
The U.K. is to release data on retail sales.
Canada is to round up the week with data on retail sales.
Source: Investing.com
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