FX Roundup: Dollar reasserts itself following days of decline

The dollar posted gains on Friday as the President of the New York Federal Reserve Charles Dudley described current US monetary policy as “quite accommodative.”

In Dudley's opinion, the fact that the current economic expansion was now nearly seven years-old – and thus the third longest since the Second World War – did not mean the risk of recession was edging higher.

"Since the possibility is low that a significant inflation risk would emerge over the near term, this means the main danger facing the current expansion is the risk of large, adverse shocks," he added.

At 1653 GMT, the euro was down 0.81% against the greenback exchanging at $1.1231, while the pound was down 0.10% exchanging at $1.4463. The dollar also rose 0.54% against the yen to JPY113.03 following days of declines.

Kit Juckes, head of forex at Societe Generale, said, “It was much more about [equities and commodities] markets than news this week. The major ‘news' came from the US where Federal Reserve Chairwoman Janet Yellen spent two days testifying to Congress and Senate, without any of us learning very much.

“At the margin she was more dovish than in her most recent utterances, but that wasn't a surprise given the fall in oil prices and the weakness in global markets. The only major US data saw retail sales narrowly beat consensus forecasts with a 0.1% ex autos month-on-month gain, +0.4% ex autos and gasoline sales.”

However, commodity currencies were in mixed mode as the weekend approached. The greenback fell 0.74% against the Canadian dollar exchanging at CAD$1.3834. However, the Australian dollar fell 0.14% against its US counterpart exchanging at US$0.7099, while the New Zealand dollar also fell 1.31% exchanging at US$0.6629.

Finally, in Latin America, the dollar fell against major regional crosses, including the Colombian (down 1.06%), Chilean (down 1.09%), Mexican (down 0.83%) pesos and the Brazilian real (down 0.40%).