By Investing.com – The U.S. dollar traded with small losses Friday, but remained on course for weekly gains as traders reassessed likely Federal Reserve rate cuts in the wake of the strong payrolls number.
At 04:30 ET (08:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 102.594.
For the week, the index is on track for 0.4% advance, building on the previous week’s over 2% surge.
PPI data up next
The dollar has been in demand since last week’s strong payrolls report, with traders largely ruling out the chance of another hefty interest rate cut by the Federal Reserve at its next meeting.
Although the surge in initial jobless claims on Thursday created some doubt about the health of the labor market, the uptick in the consumer price index reminded traders that inflation could still be an issue.
US producer prices data are due later in the session, and are likely to show minor gains, but a degree of uncertainty exists following the slightly stronger-than-expected consumer inflation in September.
For now, bets for a quarter-point Fed rate cut on Nov. 7 have increased to 83.3% from 80.3% a day earlier, with the remaining odds for policy to stay steady, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.
British economy returns to growth
In Europe, GBP/USD rose 0.1% to 1.3068, after data showed that Britain’s economy returned to growth in August after two consecutive months of no growth.
UK gross domestic product rose by 0.2% in monthly terms in August, largely in line with expectations, and grew by 1.0% compared with a year ago.
Britain’s economy now looks on track for a third consecutive quarter of economic growth. The ONS said data for September GDP would need to show a month-on-month fall of 0.3% to 0.6% to generate a flat quarterly reading, assuming no revisions to existing figures.
EUR/USD traded 0.1% higher to 1.0944, after German consumer inflation eased to 1.8% in September, the federal statistics office said on Friday, confirming preliminary data.
With inflation in the eurozone’s largest economy now running below the European Central Bank’s target, and growth stagnating, the ECB is widely expected to ease policy once more next week, having already cut rates twice this year.
“While arguments against a rate cut shouldn’t be entirely dismissed, it would now take quite a lot of courage from the ECB to hold, given markets and the consensus are fully aligned for a 25bp reduction,” analysts at ING said, in a note.
Yuan gains ahead of briefing
USD/JPY fell 0.1% to 148.75, after coming close to 150 yen earlier in the week, a level previously not seen since Aug. 2.
USD/CNY fell 0.2% to 7.0672, with the yuan gaining slightly ahead of an upcoming finance ministry briefing, where the government said it will outline plans for fiscal stimulus.
Analysts expect Beijing to outline at least 2 trillion yuan ($283 billion) of fiscal support, with a bulk of the amount being targeted at supporting private consumption.