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US Dollar Index Falls, but Outlook Remains Solid after Eventful Week

H.S. Borji
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US Dollar Index Falls, but Outlook Remains Solid after Eventful Week

The US dollar index backtracked Friday, as a dearth of economic data in the United States and Europe resulted in profit-taking in the forex markets.

The dollar index, a broad measure of the greenback’s performance, declined more than 0.1 percent to 80.10. The index, having risen more than three-quarters of a percent this week, rebounded strongly from four-and-a-half month lows on the heels of the Federal Reserve’s latest decision to continue the tapering process.

The euro rose to a daily high of 1.3810 US after suffering heavy losses in the second half of the week. The EURUSD pair was consolidating at 1.3799 in North America’s afternoon session, representing a gain of more than 0.1 percent.

The dollar fell 0.2 percent against the Japanese yen, sending the USDJPY pair to 102.2260. The pair remains on track for a weekly gain of 0.8 percent.

Strong retail sales and CPI data helped the Canadian dollar rebound strongly Friday. The USDCAD pair was trading nearly 0.3 percent lower at 1.1212. The pair is on track for a 1 percent weekly gain.

The Fed’s latest decision is expected to keep the US dollar well supported heading into next week. With interest rate expectations firmly rooted in the markets, the greenback could enjoy new-found support amid a heavy flow of economic data, headlined by home sales, durable goods orders and revised GDP figures.

Central bank policymakers expect to increase the target interest rate as early as Q2 2015, the Fed’s summary of economic projections showed Wednesday.

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