Investing.com - The dollar steadied on Friday, but still ended the week close to nine-month lows amid expectations that several major central banks around the world are getting ready to join the Federal Reserve in tightening monetary policy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged up to 95.39. Earlier in the day the index fell to a roughly nine-month low of 95.22.
The index ended the second quarter down around 4.8%, its biggest quarterly percentage decline since the third quarter of 2010.
Investor expectations mounted for tighter monetary policy across the globe after the heads of the European Central Bank, the Bank of England and the Bank of Canada adopted a more hawkish view on monetary policy.
Hawkish signals from foreign central banks contrasted with doubts over whether the Federal Reserve will be able to hike rates again this year given a recent batch of weak U.S. economic data and growing skepticism that the Trump administration will be able to deliver on its pro-growth agenda.
The euro was a touch lower against the dollar late Friday, with EUR/USD dipping 0.13% to 1.1425.
The single currency touched 14-month highs of 1.1444 on Thursday and ended the week with gains of 2.02%.
The euro has risen 7.1% against the dollar in the three months to June, its largest quarterly percentage gain since the third quarter of 2010 and has added 8.65% for the year to date.
Sterling was slightly higher against the dollar, with GBP/USD rising 0.16% to 1.3027, to end the week with gains of 2.22%.
The Canadian dollar was also higher, with USD/CAD down 0.34% at 1.2960 in late trade, after falling to 1.2948 earlier, the weakest level since September 9.
The dollar pushed higher against the yen, with USD/JPY rising 0.2% to 112.40 and ended the week with gains of 1.05%.
Policymakers at the Bank of Japan have indicated that they favor sticking to ultra-loose monetary policy, with inflation still well below the banks 2% target.
The divergent monetary policy outlook between the Fed and the BoJ has helped support the dollar against the yen.
In the week ahead, investors will be focusing on Wednesday’s minutes of the Fed’s latest meeting for fresh cues on the timing of the next U.S. rate hike. Friday’s U.S. jobs report for June will also be closely watched.
Employment data from Canada will be in the spotlight amid speculation that the BoC could raise interest rates as soon as this month.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 3
Japan is to publish the results of the Tankan surveys of manufacturing and service sector activity.
China is to publish its Caixin manufacturing PMI.
The UK is to release data on manufacturing activity.
Financial markets in Canada are to remain closed for a holiday.
BoE Governor Mark Carney is due to speak at an event in Frankfurt.
Later Monday, the Institute for Supply Management is to publish its manufacturing index.
Tuesday, July 4
Australia is to release data on retail sales.
The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.
The UK is to release data on construction activity.
Financial markets in the U.S. are to remain closed for the Fourth of July holiday.
Wednesday, July 5
The UK is to release data on service sector activity.
The U.S. is to release data on factory orders.
Later in the day, the Fed is to publish the minutes of its latest monetary policy meeting.
Thursday, July 6
Australia is to release a report on the trade balance.
Switzerland is to publish its latest inflation figures.
The U.S. is to release the ADP nonfarm payrolls report for January as well reports on jobless claims trade, while the ISM is to release its non-manufacturing PMI.
Canada is also to release data on trade along with a report on building permits.
Friday, July 7
The UK is to release industry data on house price inflation, as well as a report on manufacturing production.
Leaders from the G20 nations are to hold the first day of a summit meeting in Hamburg.
Canada is to publish its monthly employment report.
The U.S. is to round up the week with the non-farm payrolls report for June and the Fed is to publish its bi-annual monetary policy report.