The US dollar gave up its gains early on Friday as traders settled their positions before month’s end and a holiday weekend after seeing new economic data confirming expectations for US inflation and the recovery of the COVID-19 pandemic.

The U.S. dollar index of major currencies rose 0.4% during the day in a strong rebound from four-and-a-half-month lows reached on Tuesday before falling flat for the day and week to 89, 99.

The end with little change was a break with the downward trend since March which had taken 3 percent of the value of the US dollar as other major economies began to catch up with vaccination rates in the United States.

At the same time, the central banks of some other countries seemed likely to act faster than the US Federal Reserve to move away from easy monetary policies and let interest rates rise.

The euro rose 0.05% to US $ 1.22 on Friday afternoon, from a four-month high of US $ 1.2266 earlier in the week.

The British pound remained stable at US $ 1.4199, continuing its recent struggle to stay above US $ 1.42.

In Taipei, the new Taiwan dollar rose against the greenback, rising NT $ 0.055 to close at NT $ 27.767, up 0.6% for the week.

The US and UK have public holidays tomorrow.

The US economic data had been considered the big scheduled news for the week, but it didn’t move the bond and stock markets much when it was released in the morning.

Data showed that consumer prices last month rose well beyond the US Federal Reserve’s 2% annual rate target.

The inflation readings had been widely anticipated and should not have an impact on the policy of the Fed, which viewed recent price increases as adjustments to reopen the economy.

The next big event for the markets is the Fed’s monetary policy meeting on June 15-16, which could provide clues to rising US interest rates.

Fed officials could show projections for stronger economic growth. This would indicate that the central bank would reduce its bond purchases and allow long-term interest rates to rise, which would support the US dollar, said Joseph Trevisani, senior analyst at FXStreet.com.

“The Fed is trying to prepare the markets for the inevitability of the cut,” Trevisani said.

The main currency that would likely lose against the US dollar is the Japanese yen, Trevisani said, citing problems with Japan’s recovery from the pandemic, relative to Europe and the UK.

The US dollar appreciated against the yen early on Friday and hit a seven-week high before slowing to show little change on the day. The US dollar last traded around 109.77 ¥ after hitting 110.2 ¥.

The Chinese onshore yuan appreciated to 6.358 per dollar, a three-year high. The US dollar last traded at 6.3616 yuan, down 0.15% for the day.

CNA Supplementary Reports, with Staff Writer

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