On Friday, the U.S. dollar was flat in early trade in Europe before the release of crucial inflation data, the EURO inched up and the Japanese yen dropped slightly but stayed on track for the strongest week in 3 months.
The U.S. dollar index, which measures its strength against 6 other major currencies, traded generally flat at 104.127.
The dollar was supported somewhat by data that showed the U.S. economy expanded at a faster rate than anticipated and inflation in the second quarter slowed.
The reading fueled hopes that the U.S. economy was on track for a soft landing, where inflation eases while growth remains steady.
The dollar gains were however capped, as U.S. macro is not the only factor driving the foreign exchange markets nowadays.
Analysts at ING said in a note that U.S. data has been overshadowed by the unwinding of carry trades, frontloaded US election positioning, and the fallout of the tech sell-off having generated moves big enough in magnitude.
Friday’s focus is now solidly on the PCE price index data, due for release later in the session, which will likely show inflation in June eased further, keeping expectations for a rate cut in September intact.
