The U.S. dollar surged to a one-year high on Friday, poised for its strongest weekly gain since September, buoyed by diminished expectations for Federal Reserve rate cuts and anticipation of inflationary pressures from President-elect Donald Trump’s proposed policies.
The dollar index climbed to 106.81, up nearly 1.8% for the week, reflecting optimism about U.S. economic growth, a tight labor market, and persistent inflation. Fed Chair Jerome Powell affirmed that the central bank is under no urgency to lower interest rates, pushing the probability of a December rate cut below 50%, as per the CME FedWatch tool.
Global Currency Trends
- Pound Under Pressure: The British pound fell 0.1% to $1.2662, marking its steepest weekly decline since January 2023, amid disappointing UK GDP data.
- Euro Weakens: The euro fell 1.4% for the week to $1.0568, hitting a one-year low, driven by concerns over U.S. tariffs and softer eurozone interest rates.
- Yen Near Intervention Levels: The Japanese yen slid past 156 per dollar, down 2.4% for the week, prompting Japanese officials to warn of potential market intervention.
Cryptocurrency Update
Bitcoin dropped below $90,000 as investors booked profits following a 30% two-week rally. Optimism over anticipated regulatory reforms under Trump’s administration has fueled interest in the digital asset class.
