NEW YORK- The dollar slipped against most major currencies on Friday as traders booked profits after recent gains but the US currency remained well-placed for further advances, supported by strong US economic data that has prompted markets to dial back expectations for interest rate cuts.
Data on Friday showed new orders for key US -manufactured capital goods rebounded more than expected in April and shipments of these goods also increased, suggesting a pickup in business spending on equipment early in the second quarter.
This follows Thursday’s data that showed US business activity in May accelerated to the highest level in just over two years and manufacturers reported surging input prices.
Minutes from the Federal Reserve’s last meeting published this week showed a lively debate among policymakers as to whether current rates were sufficiently restrictive to cool inflation.
The dollar was down 0.3 percent at 104.72 against a basket of currencies on Friday, after advancing in five of the last six trading sessions. For the week the index was up 0.2 percent .
The euro was up 0.3 percent at $1.08495 late on Friday.
“Investors are just now taking the opportunity to reflect back on the week and take some profits … it’s really purely a positioning play,” said Boris Kovacevic, global market strategist at payments company Convera in Vienna.
While stronger-than-expected US economic data has led traders to push out the timing of the first Fed rate cut to September, expectations for rate cuts by other central banks have also slipped.
“For as much as expectations of easing from the Federal Reserve have cooled off over the last week, it’s a similar story for central bankers around the world – ECB rate cut changes have also downshifted after lots of official commentary since Monday,” said Helen Given, FX trader at Monex USA in Washington.
