‘Resolutely’ dovish Fed sends dollar to 4th weekly loss; loonie at 3-year high

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TOKYO — The U.S. dollar skidded toward a

fourth straight weekly decline against a basket of major peers

on Friday, as the Federal Reserve stuck to its message of

ultra-low interest rates for longer.

The dollar index was on course to end the week 0.2%

lower, bringing its losses for April to 2.7%. A four-week losing

streak would be the longest since the six-week slide to the end

of last July, and the monthly loss would also be the biggest

since July’s 4% slump.

The Canadian dollar climbed to a

more-than-three-year high of C$1.2268 per greenback on Friday,

on track for a 1.6% weekly gain that would be its biggest since

the start of November.

At the conclusion of the Fed’s latest policy meeting on

Wednesday, Chair Jerome Powell acknowledged the U.S. economy’s

growth, but said there was not yet enough evidence of

“substantial further progress” toward recovery to warrant a

change to its ultra-loose monetary settings.

That growth accelerated in the first quarter, buoyed by

government stimulus checks, setting the course for what is

expected to be the strongest performance this year in nearly

four decades.

Signs that a strengthening economy, particularly in the

labor market, might force the Fed into an earlier tapering of

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its asset-purchase program had pushed the dollar index, or

DXY, to a five-month high at the end of March.

“DXY may attempt a rebound in coming days as expectations

turn to a potentially blockbuster April payrolls next week, but

gains will prove short-lived with Fed officials to underscore

Powell’s resolutely dovish stance,” Westpac strategists wrote in

a client note.

The gauge is likely to drop below 90 in the near term, from

90.6 currently, but the “DXY’s depreciation trend is likely more

of an ongoing grind than a wholesale sharp setback,” they said.

The Fed’s dovishness was in marked contrast to the Bank of

Canada, which has already begun to taper its asset purchases.

Canada’s commodity-linked loonie got additional support from a

surge in oil to a six-week peak along with higher lumber prices.

Rising commodity prices also supported the Australian dollar

, which gained 0.2% to $0.77785, climbing back toward

the six-week high of $0.78180 touched Thursday.

The euro has largely flat at $1.21165, near the

two-month high of $1.2150 set the previous session. The shared

currency is up 0.2% for the week and 3.3% for the month.

The yen, a traditional haven, saw opposite

fortunes, hurt by a recovery in U.S. Treasury yields and a rally

to record highs for global stocks that sapped demand for the

safest assets.

Japan’s currency changed hands at 108.81 per dollar, near

the two-week low of 109.22 from Thursday, setting it up for a

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loss of about 0.9% for the week.

China’s yuan traded near its strongest since March

3 in the offshore market, last changing hands at 6.4635 per

dollar, even as gauges of Chinese factory activity showed a loss

of momentum in April.

The yuan has jumped some 1.5% this month from a four-month

low of 6.5875 on April 1, but Mizuho strategist Ken Cheung wrote

in a client note that a re-pricing of growth trajectories for

China versus the United States will keep the rally in check from

here.

In cryptocurrencies, ether hovered below a record

high of $2,800.89 set on Thursday, after being lifted this week

on media reports about the European Investment Bank’s plans to

launch a “digital bond” sale on the ethereum blockchain network.

“The use case of ethereum has just grown exponentially,”

particularly with wider use of non-fungible tokens (NFTs), said

Tim Frost, the chief executive at fintech company YIELD App.

“All signs point to a continued bull market.”

Bigger rival bitcoin traded at $54,256.24,

vacillating around that level this week after dipping as low as

$47,004.20 on Sunday, following a sharp retreat from the record

high of $64,895.22 marked in the middle of the month.

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Currency bid prices at 0526 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.2117 $1.2122 -0.04% -0.83% +1.2127 +1.2116

Dollar/Yen 108.8170 108.9100 -0.01% +5.43% +109.0450 +108.7250

Euro/Yen

Dollar/Swiss 0.9089 0.9089 +0.02% +2.75% +0.9092 +0.9084

Sterling/Dollar 1.3938 1.3946 -0.05% +2.02% +1.3957 +1.3939

Dollar/Canadian 1.2274 1.2278 -0.02% -3.60% +1.2283 +1.2268

Aussie/Dollar 0.7775 0.7766 +0.14% +1.09% +0.7783 +0.7767

NZ 0.7244 0.7243 +0.03% +0.89% +0.7253 +0.7241

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Lincoln Feast)