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    Asian Session – Dollar broadly higher on hawkish Fed comments but slips against yen

    The US dollar moved higher in Friday’s Asian session as it was boosted by hawkish comments from Fed policymakers overnight. The greenback extended yesterday’s gains to advance against most major currencies, but it was lower against the yen as investors turned cautious against the prospects of further easing by the Bank of Japan or currency intervention by Japanese authorities.

    Speaking earlier today, Bank of Japan Governor Haruhiko Kuroda once again reiterated that the Bank has “ample” policy tools at its disposal while noting that the risks to the economy are “tilted to the downside”. The comments had limited impact on dollar/yen though as the pair eased to around 108.66 in late Asian trading, down from yesterday’s high of 109.39.

    The dollar was firmer against other currencies though as three Fed policymakers signaled on Thursday that the Fed will need to raise rates again this year. Cleveland Fed President Loretta Mester warned that inflation measures have moved higher, while Kansas Fed President Esther George said that the current level of interest rates is too low for the present economic conditions.

    There were also hawkish remarks from Boston Fed President Eric Rosengren who repeated his views that the markets are underestimating the strength of the US economy and the need to remove monetary accommodation.

    The comments weighed on the euro and the pound which slipped to 1.1332 and 1.4398 dollars respectively in late Asian trading.

    Better-than-expected GDP figures for Germany were unable to lift the single currency on Friday. The German economy expanded by a quarterly rate of 0.7% in the first three months of the year, beating estimates of 0.6%.

    Commodity currencies also headed lower today as crude oil prices dropped back on the back of a stronger dollar. WTI futures were last trading around 0.5% down at $46.17 a barrel.

    The Australian and New Zealand dollars declined to 0.7284 and 0.6792 respectively versus the greenback. Weaker-than-expected retail sales figures for New Zealand also weighed on the kiwi today. Retail sales in the first quarter rose by 0.8% quarter-on-quarter instead of the expected 1%.

    Coming up later today, the second estimates of Eurozone first quarter GDP figures will be eyed in the European session, while in the US session, April retail sales figures and the May University of Michigan preliminary confidence survey for the US will be watched.

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