Currencies

This prompted French President Emmanuel Macron to call a snap legislative election, taking a gamble to try to reestablish his authority by calling after sharp gains by far-right political rival Marine Le Pen.

The U.S. dollar traded largely unchanged in early European trade Friday as traders awaited the release of key U.S. employment data, while the euro steadied after the European Central Bank’s historic rate cut. 

The dollar has steadied Thursday, but has been trading largely on the back foot this week, weighed in part by the benchmark U.S. 10-year Treasury yield sliding to a two-month low as easing labor market conditions in the United States added to the case for Fed rate cuts this year.

The dollar has stabilized Tuesday following sharp losses at the start of the week after data showed a second straight month of slowdown in manufacturing activity and an unexpected decline in construction spending.

The dollar fell slightly on Thursday as U.S. Treasury yields stabilised, after the currency rose to a two-week high the previous day amid easing bets on Federal Reserve interest rate cuts.

The dollar held firm on Wednesday, boosted by higher U.S. yields ahead of key inflation data later in the week, and gaining on the Japanese yen as placid markets encouraged investors to resume carry trades.

The dollar eased against most currencies on Tuesday ahead of key U.S. and euro zone inflation data later this week that could affect expectations for major central banks’ monetary policy outlooks.

The dollar held steady on Monday, but was set for its first monthly loss this year, as investors were focused on U.S., European and Japanese inflation data to guide the global interest rate outlook.

The U.S. dollar edged lower in early European trade Friday, but was still on course for its largest weekly rise in over a month on fading expectations of early Federal Reserve rate cuts. 

Bank of America (BofA) released its currency market forecast, projecting the EUR-USD exchange rate to reach 1.12 by the end of the year. The bank’s analysts expect the majority of the euro’s appreciation to occur in the second half of the year, positioning their forecast above the consensus estimate of 1.08 for 2024.