The euro hovered near 22-month lows last Friday as traders waited to see whether U.S. GDP data due out later will reinforce signs of economic strength and send the dollar surging even higher.
After a small rise in volatility this week – albeit from multi-year lows – currency markets were quiet at the European open, with most major pairs stuck in tight trading ranges.
The dollar index versus a basket of six major currencies inched lower to 98.101 after advancing to 98.322 on Thursday, its highest since May 2017.
The euro rose 0.1 percent to US$1.1140
New orders for U.S.-made capital goods increased by the most in eight months in March. That followed other recent U.S. data that have eased fears of a sharp slowdown in the world’s biggest economy.
“This week’s break in EUR/USD below US$1.1200 has largely been a dollar story. Over the next few days, however, focus could return to Europe,” ING analysts said, citing the election in Spain on Sunday, an S&P review of Italian sovereign debt ratings, and possible French economic reforms.
The Bank of Japan on Thursday put a time frame on its forward guidance for the first time by telling investors it will keep interest rates at super-low levels for at least one more year, in a move aimed at dispelling any doubt over its commitment to ultra-loose policies.
The yen was little changed on Friday, at 111.63 yen per dollar, after shedding 0.5 percent overnight.
“The Chinese PMI and the U.S. non-farm jobs report are due over the next week and both are expected to be quite good. There is also the next round of U.S.-China trade talks, which could further lift risk sentiment,” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.
“The market could thus see a significant increase in ‘risk on’ during the Japanese holidays, pushing dollar/yen towards 113.00 yen.”
The Australian dollar rose 0.2 percent to $0.7027.
The Aussie has lost nearly 2 percent this week, hitting a near four-month trough as soft domestic inflation data boosted the prospect of a rate cut by the Reserve Bank of Australia.
The New Zealand dollar rose 0.3 percent $0.6647.
Sterling, which has been hurt this week by dollar strength and concerns Brexit talks between the ruling Conservative and opposition Labour parties had run into the sand, clawed itself back above US$1.29.