WASHINGTON (dpa-AFX) - Monetary policy expectations from the Federal Reserve
predominantly drove the Dollar's movements during the week spanning May 6 to May
10. Amidst hawkish Fed commentary and weak labor market updates, the U.S. Dollar
gained against the British pound, the Australian Dollar as well as the Japanese
yen but declined against the euro. The 6-currency Dollar Index also gained
during the week.

The Dollar Index or DXY, which measures the Dollar's strength against a basket
of 6 currencies increased 0.22 percent during the week ended May 10. The Index
closed at 105.31 on Friday versus 105.08 a week earlier. The week's low of
104.87 was recorded on Monday whereas the week's high of 105.74 was touched on
Thursday.

The Dollar attempted a rebound at the onset of the week amidst an increasing
number of Fed officials vouching for interest rates to stay higher for longer.
The dollar had plunged massively in the previous week ended May 3 after a
weaker-than-expected job market update renewed hopes of a rate cut by the Fed.
However, the rebound was short-lived as fresh data showed a spurt in jobless
claims.

Data released by the U.S. Department of Labor on Thursday showed the number of
people claiming unemployment benefits in the U.S. surged to 231 thousand in the
week ending May 4 versus 209 thousand in the previous week. The highest reading
since August of 2023 was sharply above market expectations of 210 thousand.

The euro's move from $1.0758 on May 3 to $1.0769 on May 10 helped the EUR/USD
pair to record gains of 0.10 percent during the past week. Though the pair had
descended from the high of 1.0791 recorded on Monday to a low of 1.0724 by
Thursday, it eventually closed higher on Friday at 1.0769. The rebound came as
markets reassessed the Fed's monetary policy outlook in the backdrop of the
surge in the jobless claims in the U.S.in the first week of May.

The greenback however rallied against the pound sterling during the past week
that also witnessed a dovish pause by the Bank of England. As widely expected,
the BoE held rates steady while acknowledging that CPI inflation was expected to
return to close to the 2 percent target in the near term. Votes in favor of a
cut increased to two from one in the previous review, boosting rate cut
expectations. Amidst the developments, the GBP/USD pair slipped 0.21 percent to
1.2521 on May 10 from 1.2547 a week earlier. The pair traded between the high of
1.2596 recorded on Monday and the low of 1.2446 recorded on Thursday.

The AUD/USD pair also declined 0.08 percent during the week ended May 10 amidst
a not-so-hawkish monetary policy pause delivered by the Reserve Bank of
Australia. The pair closed at 0.6603 on May 10 versus 0.6608 a week earlier. The
week's trading range for the pair was between the high of 0.6646 recorded on
Tuesday and the low of 0.6557 recorded on Wednesday.

After a week of strong gains triggered by suspected currency market intervention
by Japan, the Japanese yen reversed a portion of gains and declined against the
U.S. Dollar. The USD/JPY pair, which had closed at 152.98 on May 3 increased
1.83 percent to 155.78 by May 10. The pair ranged between the low of 153.32
recorded on Monday and the high of 155.96 on Thursday.

On the horizon are speeches by Fed Chair Jerome Powell as well as release of the
crucial CPI data from U.S. on Wednesday. Headline annual consumer price
inflation in the U.S. is seen dropping to 3.4 percent in April from 3.5 percent
in the previous month. The month-on month inflation is however seen steady at
0.4 percent. The producer price inflation due on Tuesday is also seen rising in
the month of April. In anticipation, the Dollar Index has decreased to 105.11.

Key data releases for the ensuing week are unemployment rate from U.K. and the
ZEW Economic Sentiment Index from Germany due on Tuesday, first quarter
preliminary GDP readings from Japan late on Wednesday, as well as the Industrial
Production and Retail Sales update from China on Thursday.

The EUR/USD pair has in the meanwhile increased to 1.0799 whereas the GBP/USD
pair jumped to 1.2555. The AUD/USD pair rallied to 0.6623 whereas the USD/JPY
pair is almost flat at 155.76.



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