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FOREX-Dollar edges up, on track for weekly gain, quarterly loss

Published 31/03/2017, 03:52 pm
© Reuters.  FOREX-Dollar edges up, on track for weekly gain, quarterly loss
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* Soft euro zone inflation data pressures euro

* Upward revision to US GDP data helps greenback

* Market awaits Trump trade orders later in the session

* S. African rand slumps as fin min replaced

TOKYO, March 31 (Reuters) - The dollar edged up on Friday, poised for weekly gains after solid U.S. economic data contrasted with cooling euro zone inflation, though it was set to book losses in the first quarter amid concerns about the direction of U.S. President Donald Trump's policies.

The dollar index, which tracks the U.S. currency against a basket of six major rivals, was up 0.2 percent at 100.59 .DXY , up 1 percent for the week and within a hair of a two-week high of 100.60 hit overnight. It was down 1.6 percent for the first quarter, and 0.5 for the month.

The euro nursed losses, flat on the day at $1.0675 EUR= and down 1.1 percent for the week. It was up 0.9 percent for March, and 1.5 percent for the quarter.

German and Spanish consumer price data released on Thursday showed inflation slowed more sharply than expected in March as oil prices slumped, offering some respite to the European Central Bank as it faces pressure to wind down its monetary stimulus. U.S. gross domestic product data on Thursday showed that U.S. fourth quarter growth slowed less than previously reported as consumer spending provided a boost that was partially offset by the largest gain in imports in two years. number itself wasn't great but the forward-looking indicators look pretty good," Jennifer Vail, head of fixed-income research for US Bank Wealth Management in Portland, Oregon said about the U.S. figures.

"You're probably going to see some modest reaction to the softness we're seeing in the eurozone, as it looks like some of the inflation data is not as strong as initially thought," she said. "I think the reason you didn't see more substantial dollar strength is concerns on the lack of conviction that our new president had in getting ACA repealed."

Republicans withdrew their bill a week ago to replace and repeal the Obama administration's Affordable Care Act (ACA) due to lack of support in Congress, raising concerns that Trump's tax reform and stimulus measures might also face legislative challenges.

Trump lashed out on Thursday at Republican conservatives who helped torpedo the healthcare legislation, escalating a feud within his party. TRADE ORDERS IN FOCUS

Later on Friday, Trump will sign executive orders aimed at identifying abuses that are causing massive U.S. trade deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, according to his top trade officials.

Commerce Secretary Wilbur Ross told reporters that one of the orders directs his department and the U.S. Trade Representative to conduct a major review of the causes of U.S. trade deficits, including "currency misalignment.

While the foreign exchange market's reaction to the news was muted, market participants were warily watching for developments.

"From a risk-management perspective, it's definitely something on the radar," said Bart Wakabayashi, branch manager for State Street Bank and Trust in Tokyo.

As the conditions to be labelled a currency manipulator are subjective, U.S. officials could tweak their definition so that it even included countries like South Korea and Japan, he said.

Against its Japanese counterpart, the dollar added 0.1 percent to 112.07 yen JPY= , after edging up to its highest levels since March 21. It was up 0.6 percent for the week, but down 0.6 percent for the month and skidded 4.3 percent for the quarter.

Data released on Friday showed Japan's core consumer prices rose 0.2 percent in February from a year earlier, marking the fastest annual pace in nearly two years but still distant from the central bank's ambitious 2 percent target. business year ends on Friday. The dollar was on track to lose 0.4 percent against the yen for the fiscal period.

Sterling edged up 0.2 percent to $1.2481 GBP= , on track for a slight gain in a week marked by volatile trading as British Prime Minister Theresa May formally triggered the Brexit process.

It was up 1.2 percent for the quarter, on track for its first quarterly gain against the dollar for almost two years as accelerating inflation fuelled expectations that the Bank of England was moving towards tightening policy.

The dollar rallied 1.3 percent against South Africa's rand to 13.470 ZAR= , its highest since early February, after President Jacob Zuma sacked finance minister Pravin Gordhan in a cabinet reshuffle following days of speculation that has rocked the country's markets and currency. was replaced with home affairs head Malusi Gigaba.

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