The dollar breaks a five-week losing streak

The dollar breaks s first weekly gain. However, gains were pared by a soft economic report that suggested the economy was slowing.

Japan’s consumer inflation rate remained consistent with the Bank of Japan’s target in March in the Asian region. The main index hit a four-decade peak, putting pressure on the Bank of Japan to unwind its ultra-accommodative monetary policy stance.

The dollar weakened versus the Japanese yen in the initial stages of Asian trading, though it rose against other major currencies.

The dollar index (DXY) measures the dollar versus six major peers; it was up 0.12% to 101.95. and 1.55% year to date.

Growing speculation that the Federal Reserve will increase interest rates by 25 basis points in May supported the greenback. According to the CME FedWatch tool, money markets are now pricing in an 84.62% chance of such a hike next month, compared with a 67% chance last week.

Against the dollar, the euro retreated 0.032% to $1.0968, while the sterling retreated 0.09% to $1.24326.

However, the dollar’s gains pared after Thursday’s U.S. data added to speculation of a deepening recession.

US unemployment claims rise modestly

The number of Americans filing new claims for unemployment benefits rose modestly last week. A report from the Philadelphia Fed showed that its factory activity in the Mid-Atlantic region fell back to the lowest level in nearly three years in April.

But the problem for the Fed is that with inflation still high, the Fed is going to raise interest rates again.

Japan’s economy also showed signs of rising price pressures, with data on Friday showing its core consumer price index rose 3.12% in March from a year earlier, while the index excluding fuel costs advanced at its fastest annual pace in four decades.

The dollar was last 0.072% lower against the yen at 134.14.

Friday’s reports could revive market speculation that the BOJ could wind down its massive stimulus program later this year. The Australian dollar dropped by 0.072% and stood at $0.6739, while the New Zealand dollar dropped 0.121%, trading at $0.61706.