Ammon – The dollar is heading on Friday to achieve its first weekly gain in nearly two months, as investors’ bets increased that the US Federal Reserve will raise interest rates in May, while the euro received some support from the sudden recovery of the euro-zone economy in April.
Federal Reserve officials feel that inflation remains uncomfortably high and interest rates should continue to be raised.
Money markets show that dealers believe the US Federal Reserve will raise interest rates by a quarter of a basis point next month, which would support the dollar in theory, but this would quickly be followed by a series of rate cuts as the economy slows.
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The dollar index, which measures the performance of the US currency against six other major currencies, rose 0.2 percent on the day, on track for a weekly gain of 0.4 percent, its first since late February.
The pace of recovery in the eurozone unexpectedly accelerated this month, thanks to a boom in demand for the services sector that offset a growing downturn in manufacturing.
Initial surveys showed the same momentum in Germany and France, the two largest economies in the eurozone.
The euro fell 0.1 percent to 1.0959 against the dollar, but it recovered from its lowest level during the session at 1.0938 against the dollar.
It rose 0.3 percent to 88.84 pence against the British pound.
Data on Thursday added to recessionary fears because it showed a rise in the number of new applications for unemployment benefits, while factory activity in the mid-Atlantic states hit its lowest level in three years this month.
Sterling took a hit from a decline in retail sales in Britain in March after bad weather and high inflation discouraged British consumers from shopping.
The pound sterling was last down 0.3 percent at 1.2404 against the dollar, after falling as low as 0.51 percent earlier.
The yen rose against the dollar after data showed the stability of the Japanese consumer price inflation index above the central bank’s target for the March rate, which increased pressure on the Bank of Japan to reverse its monetary easing policy.
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