The dollar index fell on Friday for two straight days after economic data showed a slowdown in consumer spending that raised some doubts about the prospects for further interest rate hikes by the US Federal Reserve.

The U.S. Commerce Department said Friday that consumer spending rose 0.1% last month. The April data was revised up to 0.6% from 0.8% earlier to show an acceleration in spending.

The personal consumption expenditures price index rose 0.1% in May, after rising 0.4% in April. In the 12 months to May, the price index for personal consumption expenditures rose 3.8% after rising 4.3% in April.

The Federal Reserve monitors the Personal Consumption Expenditure (PCE) price index to achieve its goal of keeping inflation under 2 percent.

The dollar index fell 0.377 percent to 102.920.

The index rose 0.82% during the previous two sessions after reports from Federal Reserve Chairman Jerome Powell and strong economic data that, while easing confidence, reinforced market expectations that the US central bank will raise interest rates twice this year. A rate cut is possible by the end of the year.

The dollar index rose 0.4% in the quarter, heading for a quick streak of consecutive quarterly declines. In the first half of the year, the dollar fell 0.5%.

Rising Japanese Yen

The Japanese yen rose 0.23% and briefly crossed the 145 mark against the dollar, hitting a new seven-month high of 145.07.

The dollar rose nearly 9% against the yen in the quarter, perhaps its strongest performance in a year.

Pound sterling was the best performer among developed market currencies in the second quarter, rising 2.5%, while the dollar index, measured against a basket of six major currencies, rose 0.8% in the quarter, hitting its first quarter high. Profit from third quarter of 2022. (Reuters)