US Dollar Ends Friday Mixed but Posts Weekly Gain
The greenback slipped against the euro and pound Friday but still finished the week higher as Treasury yields fell and oil prices dropped.
The U.S. dollar closed Friday in mixed territory, edging lower against the euro, British pound, and Canadian dollar while advancing against the Australian and New Zealand dollars, leaving the Swiss franc and Japanese yen positions nearly flat. Despite Friday's softness, the greenback still notched a net gain for the week as investors adopted a more defensive posture toward risk assets heading into the weekend.
Falling U.S. Treasury yields across short and intermediate maturities weighed on the dollar Friday, reducing the yield advantage that had supported demand for greenbacks in recent sessions. The EUR/USD pair rose 0.13% to 1.1384, while GBP/USD barely budged, adding just 0.01% to settle at 1.3192. USD/JPY slipped 0.02% to 161.74, and USD/CHF dipped 0.05% to 0.8094.
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A sharp drop in crude oil prices added another headwind for the dollar by easing inflation expectations and reinforcing safe-haven bond demand. Markets grew increasingly confident that geopolitical tensions in the Middle East would not disrupt energy flows through the Strait of Hormuz, particularly after the U.S., Israel, and Lebanon signed a trilateral agreement. Crude oil settled the week at $69.23 per barrel.
Sentiment was further clouded by a weaker-than-expected University of Michigan consumer confidence reading — 49.5 against a forecast of 50.0 — and a wider-than-anticipated U.S. May advance goods trade deficit of $105.8 billion versus the $85.0 billion consensus estimate. Minneapolis Fed President Neel Kashkari added hawkish pressure to the mix, signaling that rate hikes could still be on the table if broad inflation persists. Meanwhile, major stock indices closed modestly lower, with the Nasdaq leading declines.
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