The dollar advanced against most major currencies Friday, rising with the bond market on news of low inflation in April but giving back some gains on concerns about an expected U.S. interest rate hike.
Gold prices rose modestly. On the New York Commodity Exchange, gold for current delivery settled at $380.70 a troy ounce, up 80 cents. At 4 p.m. EDT, Republic National Bank quoted gold at $380.50, up 85 cents.The dollar surged in tandem with Treasury bond prices after the Labor Department reported consumer prices rose a scant 0.1 percent last month.
The data, which followed Thursday's report of modest increases in wholesale prices, eased fears of inflation, which have sent U.S. financial markets on a downward spiral in recent months.
But bonds reversed course as investors worried that the positive reports would prompt Federal Reserve policymakers, who meet next Tuesday, to raise short-term interest rates by less than what the market has deemed necessary to pre-vent inflation later in the year.
"The numbers sowed some seeds of doubt," taking some steam out of the dollar, said Win Thin, economist at MCM Currencywatch Inc.
However, the reversal slowed on expectations that the U.S. central bank will raise its target for the federal funds rate, the interest charged on overnight loans between banks, by .5 percentage point.
"The dollar didn't come off harder because of expectations for Fed action next week," Gallopo said.
In Tokyo, the dollar finished at 104.58 yen, up 0.48 yen from Thursday's close. Later in London, the dollar rose to 104.89 yen. In New York, where the trading day ends, the dollar closed at 105.05 yen, up from 104.30.
The British pound was quoted in London at $1.4990, down from $1.5000 late Thursday. In New York, the pound traded at $1.4990, down from $1.4995.
Other late dollar rates as of 4 p.m. in New York, compared with late Thursday: 1.6695 German marks, up from 1.6665; 1.4260 Swiss francs, up from 1.4245.