The dollar index headed toward the close up 0.24% on Friday, benefiting from risk aversion as an early stocks rally on the heels of China's unexpectedly large Loan Prime Rate cut unraveled and investors reverted to fears that the Fed's aggressive tightening campaign could trigger a global downturn.
As risk gains evaporated heading toward the New York close, stocks and bond yields were mired near their lows.
EUR/USD fell 0.37% to 1.0545, as growth concerns competed for investors' attention with hawkish ECB comments telegraphing rate hikes.
ECB hike odds, as per ECBWATCH on Eikon, slipped to 38% -- from 50% earlier this week -- for a +10bp hike in June, but rates markets still foresee 35bps worth of hikes by the July 21 meeting.
The firm July rate-hike pricing kept EUR/USD above this year's low of 1.0349 hit on May 13.
USD/JPY hovered near flat at 127.85, sliding from earlier highs after haven yen buyers entered the market.
With inflation at 1.2%, well below the BoJ’s target, Japanese rate hikes remain unlikely, keeping downward pressure on the yen as other central banks increase borrowing costs, though growing global recession risks may temper the currency's fall.
GBP/USD received a boost from above-forecast retail sales.
Sterling bulls initially lifted the pound after the data beat but ran into resistance at 1.2500, just below Thursday’s 1.2523 high, which was put in after UK CBI orders matched recent highs.
The recent upbeat data tempered UK recession expectations, which may limit the fall in BoE rate-hike expectations.
Bitcoin and ether fell near 5% as the Fed’s inflation-fighting rhetoric and reduced liquidity sapped cryptos of vigor.
BTC was flirting with support at the May 14 low by 28.56k.
A close below 28.56k would put this year's low of $25.4k, struck on May 12, in focus.
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