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Dollar Turns Weak Against Major Rivals

The U.S. dollar exhibited weakness against most of its peers on Friday with traders reacting to a slew of economic data and weighing Fed Chairman Jerome Powell's comments about tapering of the central bank's bond buying program.

Federal Reserve Chairman Jerome Powell indicated he is now more concerned about higher inflation and said that the central bank would watch carefully for signs that households and businesses were expecting sustained price pressures to continue.

"Supply-side constraints have gotten worse," Mr. Powell said Friday at a virtual conference. "The risks are clearly now to longer and more-persistent bottlenecks, and thus to higher inflation."

The central bank will "need to make sure that our policy is positioned for a range of possible outcomes," he said. "I do think it is time to taper. I don't think it is time to raise rates," he added.

Elsewhere, Atlanta U.S Federal Reserve President Raphael Bostic said he expects high inflation to persist into 2022 and the central bank should raise interest rates by the end of next year.

The dollar index slid to 93.54 a little before noon, and despite recovering and briefly emerging above the flat line about an hour later, retreated again. It is hovering around 93.60, down nearly 0.2% from the previous close.

Against the Euro, the dollar weakened to 1.1642 from 1.1627. The flash euro zone composite output purchasing managers index (PMI) dropped to a six-month low of 54.3 in October from 56.2 in September, according to IHS Markit. The flash services PMI dropped to 54.7 from 56.4, also a six-month low.

The dollar firmed against Pound Sterling, gaining to 1.3758, rising about 0.25% from Thursday's close of 1.3794. The seasonally adjusted IHS Markit/CIPS U.K. manufacturing PMI unexpectedly improved to 57.7 in October versus 55.8 expected while the services PMI came in at 58.0 versus 54.5 expected.

The Yen strengthened to 113.48 a dollar, gaining from 114.00. The manufacturing sector in Japan continued to expand in October, and at a faster pace, the latest survey from Jibun Bank showed on Friday with a manufacturing PMI score of 53.0.

That's up from 51.5 in September, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Against the Aussie, the dollar is trading at 0.7466, little changed from the previous close of 0.7468. The manufacturing sector in Australia continued to expand in October, and at a faster pace, the latest survey from Markit Economics showed on Friday with a manufacturing PMI score of 57.3. That's up from 56.8 in September.

The Swiss franc has strengthened to 0.9163 a dollar from 0.9184, while the Loonie is slightly up against the dollar at C$1.2367.

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