The dollar edged higher in light trade Friday as investors bought back greenbacks ahead of the weekend following a precipitous selloff earlier in the week. The ICE U.S. Dollar index DXY, +0.30% a measure of the dollar's strength against a basket of six rival currencies, rose 0.2% to 95.0860 in recent trading. It has fallen 1.3% so far this week as investors priced in a new set of Fed projections for the expected path of interest-rate hikes. "The big events of the week are pretty much behind us so we're not seeing much activity today," said Sireen Harajli, currency and rates strategist at Mizuho. After strengthening against its rivals earlier in the week, the dollar turned sharply lower on Wednesday when the Federal Reserve halved its projection for interest rate hikes in 2016 to two from an earlier estimate for four. The prospect that rates might remain lower for longer can make currencies less attractive to traders. Unfortunately for dollar bulls, Friday's gains weren't enough to erase the buck's decline from earlier in the week. It was on track to log its third straight weekly loss against the euro, and to post its largest weekly drop against the yen in a month. The loonie soars Trading in G-10 currencies was relatively muted on Friday. One notable exception was the Canadian dollar, which jumped to a five-month high against its U.S. rival after a reading on retail-sales growth in January showed a sharp rebound from the prior month. The loonie CADUSD, -0.2230% traded as high as 76.88 cents, extending its monthly gain against the dollar to 4.3%. It traded at 77.03 late Thursday in New York. It finished the week up 1.8%. Canadian retail sales rose 2% in January after a decline of 2% in December. The Canadian currency is up 4.3% against its U.S. rival so far this month, benefiting from a recovery in energy prices and the Bank of Canada's decision to keep interest rates on hold. Euro weakens on comments from ECB economist In other currency trading, the euro EURUSD, -0.4417% weakened Friday after ECB Chief Economist Peter Praet said eurozone interest rates could go lower in an interview with the Italian newspaper la Repubblica. Last week, European Central Bank President Mario Draghi said during a news conference that he didn't expect any further cuts to the ECB's deposit rate, sparking a sharp rally in the euro. The shared currency bought $1.1270 Friday, compared with $1.1319 late Thursday in New York, logging a 1.1% weekly gain. In other currency trading, the dollar USDJPY, +0.15% strengthened to ¥111.54, compared with ¥111.30 Thursday, but for the week the dollar lost 2% against the yen. The pound GBPUSD, -0.0345% was relatively unchanged at $1.4476. Source: MarketWatch
