Dollar Falls but Remains on Track for Second Straight Weekly Gain

The dollar fell on Friday but remains on track for its second consecutive weekly gain due to rising rate hike bets. This follows robust economic data, fresh energy supply concerns, and a chorus of hawkish Federal Reserve speakers that have strengthened conviction in tighter US interest rates.

A bond selloff sent long-dated US Treasury yields to their highest in over 20 years, also giving the greenback a boost. However, lingering concerns around the US fiscal position and policy making unpredictability have hindered the dollar's ability to continue rallying despite increasing yields, according to Khoon Goh, head of Asia research at ANZ.

The yen rallied after Japan's Finance Minister Satsuki Katayama reaffirmed the shared US-Japan stance behind July's joint intervention. This statement reinforced the possibility that additional intervention could include the US. Despite this, the yen was on track for a second weekly fall following markets' judgment of the Bank of Japan's rate hike last week as insufficiently hawkish.