Investing.com - The dollar fell to near one-month lows against a basket of the other major currencies on Friday as risk appetite was boosted after China’s central bank lifted the fixed rate of the yuan and as the European Central Bank indicated it still had policy options available to bolster growth.
China’s central bank boosted the fixed rate of the yuan following a sharp rally in the euro on Thursday, after ECB President Mario Draghi appeared to indicate that the bank would not cut interest rates deeper into negative territory.
The move boosted commodity prices and the commodity linked currencies, sending the dollar broadly lower.
Meanwhile, ECB Governing Council member Erkki Liikanen said Friday the bank has not run out of tools to boost the economy and will continue to support it until it reaches its inflation target of almost 2%.
The remarks came a day after the ECB delivered a stronger-than-expected package of stimulus measures, cutting interest rates across the euro zone to new record lows and ramping up its quantitative easing program.
But the euro posted its largest one day gain in a month after President Draghi's comment that he expected the bank might not have to cut rates further fueled concerns that officials were running out of policy measures to spur growth.
The euro reversed early strong gains against the dollar on Friday, with EUR/USD down 0.27% to 1.1148 in late trade. The single currency still ended the week with gains of 1.43%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was flat at 96.23 late Friday, holding just above one-month lows of 95.94. The index ended the week down 1.2%, its second straight weekly decline.
The dollar gained ground against the safe have yen as risk appetite sharpened, with USD/JPY rising 0.56% to 113.82.
The Australian and New Zealand dollars rallied, with AUD/USD advancing 1.48% to 0.7563 and NZD/USD up 1.14% at 0.6743.
The Canadian dollar rose to four-month highs, with USD/CAD down 0.98% at 1.3214 in late trade as a rally in oil prices offset a weaker than expected Canadian jobs report.
In the week ahead, investors will be turning their attention to Wednesday’s outcome of the Federal Reserve’s latest policy meeting, with officials widely expected to keep interest rates on hold after hiking in December for the first time in almost a decade.
Central bank meetings in Japan and Switzerland will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 14
Reserve Bank of New Zealand Governor Graeme Wheeler is to speak at an event in Auckland.
Tuesday, March 15
The Reserve Bank of Australia is to publish the minutes of its latest monetary policy meeting, giving investors insight into how officials view the economy and their policy options.
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The U.S. is to publish reports on retail sales, producer prices and manufacturing activity in the New York region.
Wednesday, March 16
The U.K. is to release its latest employment report and the government is to publish its annual budget statement.
Canada is to produce data on manufacturing sales and foreign securities purchases.
The U.S. is to publish report on building permits, housing starts, consumer inflation and industrial production.
In addition, the Federal Reserve is to announce its benchmark interest rate and hold a press conference to outline the factors affecting the monetary policy decision.
New Zealand is to publish data on gross domestic product.
Thursday, March 17
Australia is to publish its latest employment report.
The Swiss National Bank is to announce its Libor rate and hold a post-policy meeting press conference.
The Bank of England is to announce its interest rate decision and publish the minutes of its monetary policy meeting.
The U.S. is to report on initial jobless claims and the Philly Fed manufacturing index.
Friday, March 18
The BoJ is to publish the minutes of its latest monetary policy meeting.
Canada is to produce data on retail sales and inflation.
The U.S. is to round up the week with data on consumer sentiment.