U.S. Dollar Steadied Friday While Chinese Yuan Hit High

The U.S. dollar firmed on Friday as traders waited for U.S. inflation data to decide the currency’s direction. The U.S. dollar index climbed up by 0.1% at 90.78 in the late Asian and early European session. On Monday, the United States and Britain have a public holiday. So, the greenback’s gains could be attributed to month-end demand.

The currency traded near a seven-week high against the Japanese Yen at 109.875. Such a move prompted analysts to focus on Japan’s rise in unemployment and decline in consumer prices. There are also new reports that the government is considering extending a state of emergency over the coronavirus pandemic.

Commerzbank strategist Esther Reichelt noted that all these developments would not have any effect on Japan’s monetary policy, however. That means it’s the U.S. monetary policy and the greenback, along with risk sentiment, that drive USD-JPY.

She added that while in the short term, there might be an uptrend, over the further course of the year, the dollar would likely weaken, and as a result, USD-JPY levels would lower.

What About the Euro and Other Currencies?

The Euro tumbled down by 0.1% at $1.21875 on Friday, trading below its recent high of $1.2266. The dovish comments from European Central Bank officials hindered the common currency’s momentum ahead of the policy meeting on June 10.

The British pound lowered by 0.2% at around $1.41835. Still, it remains on track for its best month against the dollar so far this year.

Meanwhile, the New Zealand dollar declined by 0.6% at 0.7247. The kiwi soared earlier in the week on the prospect of an interest rate hike by September 2022, but its rally proved short-lived.

The Australian dollar also plummeted down 0.3% at 0.7722 on Friday. On the other hand, China’s onshore yuan skyrocketed to a new three-year high.

Chinese regulators announced late on Thursday that they plan to crack down on manipulating the currency market. They also added that there would be no change to the country’s currency policy soon.