US dollar stabilizes ahead of US data and the euro falls

US dollar stabilized on Friday as traders studied the impact of stronger-than-expected economic growth data on the course of the Federal Reserve’s interest rate decisions and awaited key inflation data later in the day to obtain more evidence.

According to Reuters, official data showed that the US gross domestic product in the last quarter rose at an annual rate of 3.3%, exceeding expectations for a growth of 2.0%. The data also showed a decline in inflationary pressures.

Charu Chanana, head of the currency analysis unit at Saxo Singapore, said: “The GDP data renewed hopes for a soft landing for the US economy, but the bond market focused more on the low inflation component of the report, which pushed yields lower.”

The dollar index, which measures the performance of the US currency against a basket of major currencies, hovered around 103.53 during Asian trading hours after rising by about 0.2% overnight.

US 10-year Treasury bond yields fell to 4.11%.

The dollar has risen about 2 percent since the beginning of the year, with market expectations for a US interest rate cut somewhat diminished compared to late last year.

The euro fell in recent transactions to $1.08385, but remained above the lowest level in six weeks at $1.08215, which it touched on Thursday.

As expected, the European Central Bank maintained its monetary policy at its meeting on Thursday, although traders increased their bets that the bank will cut interest rates from April.

The British pound fell 0.10 percent on Friday, trading near $1.2698. The Bank of England will announce its decision on interest rates next Thursday.

The yen settled in the latest trading at 147.77 per dollar.

Data on Friday revealed that core inflation in the Japanese capital slowed to 1.6 percent in January compared to the previous year, below the central bank’s target of 2 percent.