The U.S. dollar eked out a gain in afternoon trading on Friday, reversing a weekly loss.
Friday’s session was marked by improved risk appetite across financial markets even as net-negative U.S. economic news mixed with positive data from China and new hopes of a trade deal.
The ICE U.S. Dollar Index DXY, +0.24% was last up 0.4% at 96.517, after briefly dipping into negative territory after some weaker-than-expected economic reports.. For the week, the gauge was on track to be little changed in positive territory.
The ISM manufacturing index for February read 54.2, rather than 55.5 expected, also having fallen from the prior month. The consumer-sentiment index for the same month slipped to 93.8, versus the 95.6 consensus expectation. Earlier, personal income for December beat estimates, while the January figure was lower than expected. December consumer spending contracted by 0.5%, its biggest drop since 2009, and December core inflation was in line with expectations at 0.2%.
Meanwhile, officials from Washington and Beijing are set to meet again this month, spurring hopes that negotiations could wrap up in as soon as two week’s time, according to a Bloomberg report. The U.S. was set to raise tariffs on Chinese imports to 25% on Friday, but refrained from doing so, leaving market bulls to hold out hope that a trade deal between Washington and Beijing would be struck sooner versus later.
China’s yuan was mildly weaker against the greenback on Friday, with one dollar buying 6.7064 yuan USDCNY, +0.1897% in Beijing, up 0.2%, and 6.7170 yuan USDCNH, +0.1671% in the offshore market, up 0.2% from Thursday.
During Asian market hours, China’s Caixin manufacturing purchasing managers index for February came in at 49.9, beating consensus estimates of 48.5, as well as the prior number.That was just 0.1 point below 50 — the threshold that denotes economic expansion — which soothed investor worries about economic contraction in China.
The Japanese yen USDJPY, +0.50% viewed as a haven in times of global uncertainty, was weaker on Friday as risk appetite improved, even though a resolution of trade tensions would also be good news for Japan, which is part of the China trade complex. One dollar last fetched ¥112.04, up 0.6%, hitting its highest level since late December.
Canada reported fourth quarter gross domestic product growth, which was below expectations and led the Canadian dollar USDCAD, +0.9108% to retrace its previous strength. GDP grew 0.4% on the quarter between October and December, versus 1% expected. The GDP by industry measure contracted by 0.1% month-on-month in December. One U.S. dollar last bought C$1.3299, up 1% at a two-week high, according to FactSet.
In Europe, flash estimates for harmonized eurozone inflation for February was in line with expectations at 1.5% year-over-year. German economic data were mixed, with a stable unemployment rate, a contraction in its manufacturing PMI to 47.6, but a bounce in January retail sales, which beat expectations.
The euro EURUSD, -0.0440% was last modestly stronger at $1.1360, compared with $1.1372 late Thursday.
In the U.K., manufacturing expanded in February, contrasting with German economic reports, despite the continuing Brexit drama. The British pound GBPUSD, -0.3921% last bought $1.13197, down from $1.3261 Thursday.
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