By James Ramage
The dollar eased against the euro and the British pound on
Friday as lukewarm U.S. data reflected a mildly slowing economy and
diminishing confidence among Americans to spend money.
The euro inched up 0.1% to $1.0896 and increased 0.7% for the
week. The U.K. pound rose 0.2% to $1.4879 but slipped 0.4% this
week.
The dollar continued to hover in tight trading ranges against
rivals, a departure from the steep ascent it had taken since last
summer on expectations that the Federal Reserve would raise
interest rates from zero this year. Such a move, at a time when
other central banks are cutting rates or printing money to buy
bonds, would boost demand for U.S. assets and the dollar.
On Friday, however, numbers for the final revision of the U.S.
gross domestic product for the last three months of 2014 came in
below forecasts, reviving investors' caution about when the Fed
might raise rates.
"Rate hikes in June and September seem too early," said Lennon
Sweeting, dealer at USForex, which helps U.S. corporations hedge
their currency exposure. "If metrics continue on the path they're
on right now, and the dollar continues to trade near current
levels, the Fed would be hard-pressed to hike rates before the
fourth quarter."
U.S. GDP grew at an annual rate of 2.2% in the fourth quarter,
the Commerce Department said. The number, unchanged from its
previous estimate in February, was below economists' predictions
for an upward revision to 2.4% growth.
In addition, the University of Michigan final March sentiment
index showed a reading of 93.0, lower than the final February
reading of 95.4. Foul weather and an uptick in gasoline prices
discouraged lower-income Americans from spending.
The dollar didn't move much after Fed Chairwoman Janet Yellen
took a cautious stance on the pace of interest-rate increases. In a
speech Friday prepared for a conference sponsored by the Federal
Reserve Bank of San Francisco, she said the central bank has some
distance to go to hit its growth and price mandates and would
hesitate to raise rates if inflation pressures weaken further.
Next week, investors will look to personal consumption
expenditures, the Fed's preferred measure for inflation, and the
February jobs report for direction on the dollar.
In other trade, the dollar held flat against the Japanese yen,
at 119.19 yen, and has declined 0.7% for the week.
Write to James Ramage at james.ramage@wsj.com