Dollar set to snap 5-week win but yen hits lowest in almost 3 years
The dollar headed for its first weekly decline versus major peers since the start of last month, falling back from a one-year high as traders turned their attention to when the U.S. Federal Reserve will start raising interest rates.
The dollar index, which measures the greenback against six rivals, was little changed at 94.034 on Friday. It is on track for about a 0.1% decline this week despite hitting the highest since Sept. 25 of last year at 94.563 on Tuesday.
Improved market sentiment, which has lifted global stocks, commodity prices and bond yields, is also weighing on the safe-haven dollar.
Only against the yen — another safe haven — has the dollar managed to maintain the momentum of the past five weeks, rising 0.16% on Friday and touching 113.885 yen for the first time since December of 2018.
Minutes of the Fed’s September meeting confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.
Money markets are currently pricing in about 50/50 odds of a 25 basis point rate hike by July.
Any dips in the index should be limited to 93.70, they said.
The next major test of the U.S. economy’s health comes later on Friday with the release of retail sales figures.
The euro slipped 0.09% to $1.1588 after touching $1.1624 on Thursday for the first time since Sept. 4.
Sterling was little changed at $1.36705 following its climb to the highest since Sept. 24 at $1.3734 overnight.
U.S. yields rise on bearish rates outlook
Treasury yields rose and a market indication of inflation expectations hit the highest since 2005 on Friday as an unexpected increase in U.S. retail sales in September added to bearish bond sentiment about the path of interest rates.
The yield on benchmark 10-year U.S. Treasury notes rose 5.5 basis points to 1.574% amid fears that supply constraints, as seen in shortages of motor vehicles and other goods, could disrupt the holiday shopping season.
Reference: CNBC, Reuters
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