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    Greenback retrieved from a five-month low

    The dollar retrieved from a five-month low against a basket of the other major currencies on Friday, as investors bought back greenbacks ahead of the weekend following an aggressive selloff earlier in the week. The greenback’s losses of 1.09%, came after the Federal Reserve surprised markets by cutting its rate hike projections more than expected, down from four to two in 2016.
     
    The Fed scaled back forecasts for how high interest rates will rise this year following the conclusion of its policy meeting on Wednesday, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy. Investors and economists dialed back their own rate hike expectations in wake of the Fed’s surprisingly dovish outlook, with traders of interest-rate futures now seeing no rate rise before September.
     
    On Friday, the greenback edged up against the Japanese yen, after Japanese Finance Minister Taro Aso said that he would closely watch foreign exchange market moves, sparking speculation that the Bank of Japan had intervened in currency markets.On the week, the dollar shed nearly 2% against the yen, its steepest fall against the Japanese currency in five weeks.
     
    Elsewhere, the single currency retreated from a five-week high against the dollar on Friday, after European Central Bank Chief Economist Peter Praet said euro zone interest rates could go even lower. It was still up over 1% for the week.
     
    The Canadian dollar rallied to five-month highs against its U.S. counterpart, after a reading on retail sales growth in January showed a sharp rebound from the prior month. It finished the week up 1.8%.
     
    The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tacked on 0.3% on Friday to settle at 95.07, moving away from a five-month low of 94.61 hit overnight.
     
    In the coming week, the focus will be on Friday’s final reading on U.S. fourth quarter gross domestic product for fresh indications on the strength of the economy, as well as Tuesday’s survey data on euro zone business activity as well as fresh readings on German economic sentiment for indications on the health of the region’s economy.
     
    Market participants will also be observing a number of speeches from key Fed officials this week, including James Bullard, Dennis Lockhart, Jeffrey Lacker, Charles Evans and Patrick Harker.

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