US dollar strengthens against trading pairs

The US dollar strengthened against its major trading partners including Sterling, Euro early Friday, except for another small decline versus the yen from elevated levels, before the release of import and export price data for March.

A quick summary of foreign exchange activity showed that USDEUR fell to 1.0657 from 1.0726 at the Thursday US close and 1.0730 at the same time.

The European Central Bank, ECB, held its target rate steady at its meeting on Thursday but suggested that rate cuts would be appropriate if economic conditions continue to evolve as expected.

The next ECB meeting is scheduled for June 6, when some analysts see the possibility of a rate decrease. There are no Eurozone data on Friday’s schedule.

GBPUSD fell to 1.2476 from 1.2553 at the Thursday US close and 1.2537 at the same time Thursday morning. UK GDP rose slightly in February but was still down from a year earlier, data released overnight showed. The next Bank of England meeting is scheduled for May 9.

USDJPY fell slightly to 153.27 from 153.2788 at the Thursday US close but was up from 153.1515 at the same time Thursday morning. Japanese consumer sentiment fell modestly in April while industrial production fell more than expected in February, data released overnight showed.

The next Bank of Japan meeting is scheduled for April 25-26. USDCAD rose to 1.3743 from 1.3742 at the Thursday US close and 1.3688 at the same time. There are no Canadian data on Friday’s schedule. The next Bank of Canada meeting is scheduled for June 5.

U.S. inflation is proving difficult to quell, raising the prospect of the Fed sustaining high interest rates. But analysts expect the European Central Bank to reduce borrowing costs as soon as June. The Bank of England could also start cutting this summer if inflation continues to subside in the U.K., analysts say.

The euro could drop to $1 for the first time since late 2022, when an energy crisis was ravaging the Eurozone economy, analysts at Dutch bank ING said. A weaker currency would benefit the continent’s struggling exporters.

In the U.S., traders see a roughly one-in-four chance the Fed cuts rates by its June meeting, down from more than 50% a week ago, according to CME Group.