More woes for USDX as it dips by 0.6% on Friday

The US dollar was the main loser in global foreign exchange market trading as Friday afternoon got underway.

The currency has been suffering over the course of the day after Jerome Powell, who heads up the American central bank, used a key speech on Thursday to confirm that the Federal Reserve would work to meet inflation targets.

The target rate is, as some expected, 2% when averaged out.

Now, market watchers expect the Fed to use its extensive monetary policy tools to adjust inflation levels to meet this average.

To most traders, however, this will primarily mean that low interest rates are likely to persist long after the coronavirus pandemic has ended.

In the dollar index, which aims to bring together the currency’s performance compared to major competitors, the dollar was down to 92.425 by the middle of Friday morning.

Overall, this meant that it had declined by three-fifths of a percentage point over the day.

Elsewhere around the world, Japan remained in the forex spotlight following a shock political move earlier in the day.

Shinzō Abe, who has been at the helm of the country’s government as its Prime Minister for eight years, announced that he was leaving office.

By mid-morning in the GMT timezone, the yen was spotted at 105.685.

Overall, the dollar has lost around four-fifths of a percentage point in value against the yen over the course of the day.

To many forex traders, Abe represented a distinctive mode of economic governance

He worked to encourage the Bank of Japan, the country’s central bank, to stick to the consistently super-low interest rates for which it is now famous.

Traders and analysts are likely to spend the next few weeks closely monitoring Japanese politics to see who might succeed Abe.

While the yen is a safe-haven currency, risky currencies also appeared to do well as Friday unfolded.

The Antipodean currencies both scaled to highs, with the Australian dollar going up to its best performance since towards the end of 2018.

The New Zealand dollar, meanwhile, was up to a fortnightly high point in its pair with the greenback.

The euro may have been expected to show some declines over the course of the day given comments by Germany’s head of government.

Angela Merkel claimed that the impact of the pandemic would pose even more problems as time goes on – especially as the winter months hit.

However, the euro shrugged off these concerns – perhaps because of the dip in the value of the dollar, a phenomenon that often leads to the euro rising.

It was spotted at $1.192 on Friday morning, which represented something of a rise.

Euro traders will now have to decide whether or not a dip in the level of household spending in Germany is sufficient cause to move away from trading the currency.