Dollar Falls, But Still on Track for Weekly Gain Amid Rate Hike Bets

The US dollar fell on Friday, but was still on track for its second consecutive weekly gain due to rising rate hike bets. The dollar index, which measures the currency against a basket of peers, climbed to a two-month high on Thursday and stood at 100.96 after falling 0.3 per cent on Friday.

Market expectations for US Federal Reserve rate increases have been strengthened by robust economic data, fresh energy supply concerns, and hawkish comments from Fed speakers. A bond sell-off has also contributed to the greenback's rise, with long-dated US Treasury yields reaching their highest in more than 20 years.

The euro rose 0.2 per cent to US$1.141 as energy prices fell, moderating wagers on US Federal Reserve rate increases. Sterling increased by 0.3 per cent to US$1.326 due to comments from Bank of England governor Andrew Bailey.

However, the yen rallied after Japan's Finance Minister Satsuki Katayama stated that Tokyo and Washington remain committed to the stance behind July's joint intervention. The Japanese currency rose 0.8 per cent from three-week lows to fetch 157.65 per dollar.