Dollar set for sixth week of gains despite slip, as slowdown worries persist

* Euro retreats below $1.04

* Dollar on track for sixth straight weekly gain

* Yen poised to snap nine-week losing streak

By Chuck Mikolajczak

NEW YORK, May 13 (Reuters) - The dollar edged lower on Friday, but was still set for a sixth straight week of gains as investors remained concerned about the possibility of global growth slowing and Federal Reserve policy tilting the U.S. 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.

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.

"By and large we are still looking at a market that is freaked out in about 16 different directions," said Joseph Trevisani, senior analyst at

"Equities are, they are worried about the U.S. growth this year, Europe is looking dicey to put it mildly and China is insisting on this fanatical COVID policy, none of that bodes well for the global economy so you are still seeing a lot of people resort to the dollar in its traditional safety role."

Investors have gravitated towards 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.

The dollar index =USD fell 0.115% at 104.640 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.

Fed Chair Jerome Powell said late Thursday that its fight to bring inflation in check would "include some pain" as the impact of higher interest rates is felt, but that the worse outcome would be for prices to continue speeding ahead.

The euro was EUR= up 0.14% to $1.0394, 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 0.80% versus the greenback at 129.38 per dollar, while Sterling GBP= was last trading at $1.2216, up 0.14% 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 7.58% to $30,707.03. 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.

Ethereum ETH= ETH=BTSP last rose 10.34% to $2,126.13.

World FX rates Link

Reporting by Chuck Mikolajczak; Editing by Alexander Smith

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.