FOREX-Dollar dips to end trading week but set for weekly gain


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    * Euro retreats below $1.04
    * Dollar on track for sixth straight weekly gain
    * Yen poised to snap nine-week losing streak

 (Updates prices, adds Mester comments)
    By Chuck Mikolajczak
    NEW YORK, May 13 (Reuters) - The dollar slipped on Friday as
a rally in equities contributed to a risk-on mood, but was still
set for a sixth straight week of gains as investors remained
concerned about slowing global growth and Federal Reserve policy
tilting the United States into a recession. 
    High inflation and the Fed's rate hike path have fueled
worries of a policy error that could cause recession or a
stagflation scenario of slowing growth and high prices. Readings
this week showed some signs that inflation was beginning to ebb,
although at a slow pace. 
    The dollar showed little reaction on Friday to data showing
U.S. import prices were unexpectedly flat in April as a decline
in petroleum costs offset gains in food and other products, a
further sign that inflation has probably peaked.*:nL2N2X50VZ 
    Other data from the University of Michigan showed its
preliminary reading of consumer sentiment for early May
deteriorated to its lowest level since August 2011 as concerns
about inflation persisted.*:nAQN11ZVXW
    Even with the recent inflation readings, Cleveland Fed
president Loretta Mester said it would need to move lower for
"several months" before the Fed can safely conclude it has
peaked, and she would she would be ready to consider faster
rates hike by the September Fed meeting if the data do not show
    "The issue is where are we looking for recovery, how are we
going to negotiate what seems to be coming down the pike. You
have a Fed that is not ready to cut rates and help the economy -
 you have a Fed that is raising rates, that is a very unusual
situation," said Joseph Trevisani, senior analyst at in New York. 
    But the greenback weakened as equities rallied after a steep
decline that recently put the S&P 500  .SPX  on the cusp of
confirming a bear market as investors looked for signs stocks
had bottomed.*:nL2N2X51N9 
    "I don’t think you have seen a capitulation in equities... I
just don’t sense the kind of panic that you usually see at the
end," said Trevisani. 
    Investors have flocked to the safe-haven on concerns about
the Fed's ability to dampen inflation without causing a
recession, along with worries about slowing growth arising from
the Ukraine crisis and the economic effects of China's
zero-COVID-19 policy amid rising infections.
    The dollar index  =USD  fell 0.143% at 104.610 against a
basket of major currencies after earlier reaching 105.01, its
highest since Dec. 2002. The U.S. currency is on track for its
sixth straight week of gains, its longest weekly streak of the
year and has climbed more than 9% for 2022.     
    The euro was  EUR=  up 0.18% to $1.0398, reversing course
after dipping to 1.0348, its lowest since Jan 3, 2017.
    The single currency was on track for its fifth weekly drop
in six and has been hurt by both fears resulting from Russia's
invasion of Ukraine stymieing the economy and the dollar rally.
    While the European Central Bank is widely anticipated to
begin hiking rates in July, the central bank is expected to
adopt a less aggressive pace than the Fed. 
    The Japanese yen weakened 0.76% versus the greenback at
129.32 per dollar, while Sterling  GBP=  was last trading at
$1.2227, up 0.23% on the day. 
    The safe-haven yen has also begun to strengthen against the
greenback, and was on track for its first weekly gain versus the
dollar after nine straight weeks of declines. 
    In cryptocurrencies, Bitcoin  BTC=  last rose 3.95% to
$29,670.89. Bitcoin earlier this week fell to its lowest level
since December 2020 as cryptocurrencies have been rattled by the
collapse of TerraUSD, a so-called stablecoin.*:nL2N2X5081

World FX rates
 (Reporting by Chuck Mikolajczak; Editing by Alexander Smith and
Nick Zieminski)
 ((; @ChuckMik;))

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