The dollar traded close to its weakest level in four months at the end of a volatile week that saw sharp moves in the Japanese yen and emerging market currencies.

Stronger US retail sales and lower weekly jobless claims released on Thursday helped the dollar to rise from its multi-month lows with the rebound continuing in early trading on Friday.

But figures showing a dip in US consumer confidence in June helped the dollar to give up some of its earlier gains with an index from the University of Michigan falling from 84.5 in May to 82.7 in June.

The dollar index, which weighs the US currency against a basket of major counterparts, was flat at 80.7 after hitting its weakest level in four months the previous day.

The US currency was mixed against other leading currencies. The euro fell 0.2 per cent to $1.3348 and the pound fell 0.2 per cent to $1.5689 after both hit their strongest level against the dollar since February earlier in the week.

The dollar fell against the yen, however, as investors continued to pare bets that Japan’s currency would weaken amid a correction in Japan’s stock market during the week and uncertainty over the timing of a pullback in the US Federal Reserve’s bond-buying programme.

The dollar fell more than 1 per cent to trade below Y95 while the euro fell 1 per cent to Y126.38.

Some emerging market currencies also regained some of their strength following heavy falls earlier in the week with many investors expressing caution that emerging market assets could suffer if the Fed reduces global liquidity.

A number of emerging market central banks took action during the week to support their currencies following the steep losses.

The dollar fell 0.8 per cent against the Indian rupee to trade below Rs58 following intervention by India’s central bank earlier in the week after the rupee hit a record low.

The dollar was also 0.2 per cent lower against the Turkish lira at TL1.85 following intervention by Turkey’s central bank to support its currency.

But the US currency remained stronger against other emerging market currencies, rising 0.8 per cent against the real to R$2.14 even after Brazil’s central bank intervened earlier in the week to stem the currency’s fall.

The dollar rose 1.3 per cent against the South African rand to R9.98 and gained 0.3 per cent against the Mexican peso to 12.67 pesos.

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