The US dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve could take its time in resuming interest rate cuts, while tariff negotiations showed more clarity that eased some uncertainty in the market.
The US currency showed little reaction to data showing new orders for key US-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately. That suggested business spending on equipment slowed considerably in the second quarter.
“The dollar regained some ground the past two days, after being on the defensive earlier in the week … supported mostly by an encouraging set of US economic data that argues for continued patience at the Fed,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman in London.
The greenback was set for its biggest weekly drop in a month, ahead of more tariff dialogue and central bank meetings next week, while sterling dipped after softer-than-expected British retail sales data.
Both the Fed and the Bank of Japan are expected to hold rates steady at next week’s policy meetings, but traders are focusing on the subsequent comments to gauge the timing of the next moves.
“We see some room for optimism at the (Fed) meeting,” wrote BNP Paribas in a research note. “Economic uncertainty associated with trade policy, while not entirely resolved, has declined markedly.”
