The U.S. dollar headed Friday toward its worst weekly performance since late July, as traders intensified bets on further monetary easing next month and liquidity thinned due to the Thanksgiving holiday in the United States.
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The dollar index, which measures the U.S. currency against six major peers, was last up 0.1% at 99.624, posting slight gains after falling for five straight sessions in its worst weekly drop since July 21.
According to the CME’s FedWatch tool, markets are pricing in an 87% chance of a 25-basis-point rate cut at the Federal Reserve’s Dec. 10 policy meeting—up sharply from 39% a week earlier.
U.S. 10-year Treasury yields rose 0.8 basis points to 4.0037%, rebounding after a five-day decline during which they briefly dipped below 4% twice.
In Asia, the yen fluctuated between gains and losses following a period of weakness.
It was last down 0.1% at 156.385 per dollar, having briefly strengthened after data showed Tokyo consumer prices rose 2.8% in November—slightly above economists’ expectations and above the Bank of Japan’s 2% target.
Capital Economics analysts wrote in a research note: “With labor-market challenges persisting and core inflation (excluding fresh food and energy) remaining above 3%, the Bank of Japan is likely to resume tightening in the coming months. The case for policy tightening remains intact.”
The yen is on track for a third consecutive monthly decline, as Japan’s prime minister unveiled a 21.3 trillion-yen ($135.4 billion) stimulus package while the Bank of Japan has refrained from raising interest rates despite inflation exceeding target.
The euro was steady at $1.1600 in Asian trading. Ukrainian President Volodymyr Zelensky said Thursday that delegations from Ukraine and the United States will meet soon to work on a framework discussed during Geneva talks to end the war with Russia and secure security guarantees for Kyiv.
The British pound slipped 0.1% to $1.323 so far today but is headed for its best weekly performance since early August, after UK Finance Minister Rachel Reeves unveiled plans on Wednesday to raise taxes by £26 billion ($34 billion).
The Australian dollar rose 0.1% to $0.6536 in early trading, after data showed private-sector credit increased 0.7% in October from the previous month.
The offshore yuan traded at 7.074 per dollar, steady in early Asian dealings and on track for its best monthly performance since August.
New Zealand’s dollar dipped 0.1% to $0.5725, wrapping up a week that saw its strongest rise since late April.
Reuters
