The dollar extended gains on Friday, June 8, but is set for its biggest weekly drop in 11 weeks while perceived safe-haven currencies including the yen and Swiss franc rose as markets shifted to wait-and-watch mode before an event-packed week.
Before what is likely to be an acrimonious G7 meeting starts in Canada later in the day, traders cut risky bets after three weeks of gains in equities and higher-yielding assets.
Next week’s expected hike in U.S. interest rates, a European Central Bank policy meeting and a Brexit bill vote all pose risks for currency traders and could pull currencies out of recent trading ranges. For a factbox, see
“A combination of the G7 meeting and other major events such as the Trump-Kim summit next week is also keeping investors on edge,” said Constantin Bolz, a fund manager at Portfolio Concept, a German-based private wealth management firm.
While the dollar rose 0.4 percent against a basket of currencies .DXY at 93.76, it was poised to notch up its biggest weekly drop since late March.
Trade disputes between the United States and its major partners will be in the spotlight, with the Mexican peso MXN=D3 and the Canadian dollar CAD=D3 leading losers.
The peso fell to its weakest level against the dollar in 16 months on Friday.
High yielding currencies were a sea of red with only the Swiss franc CHF=EBS and the Japanese yen higher on the day.
“Safe-haven assets are in demand,” said Christin Tuxen, a currency strategist at Danske Bank.
The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebb in Italian political concerns and speculation that the ECB could signal intentions to start unwinding its massive bond purchasing program when it holds the policy meeting on June 14.
