Dollar Set for Second Weekly Gain as Fed Tightening Bets Firm
The US dollar continued its upward trend, poised to secure its second consecutive weekly gain since June. The Dollar Index slipped by 0.2% to 101.09 in European trading on Friday, but still maintained a nearly 1% increase this week. This marks the first back-to-back weekly gain for the dollar in several months.
The advance is attributed to investors' expectations of further interest rate hikes from the Federal Reserve. Several officials have signaled that additional increases may be necessary if inflation fails to moderate sufficiently, supporting market predictions for another hike. Long-term Treasury yields rose significantly, with the 30-year yield reaching its highest level since June 2004.
The yen rebounded by 0.5% to 158.18 per dollar after Tokyo signaled Washington's backing for joint currency intervention. Finance Minister Satsuki Katayama stated that U.S. President Donald Trump raised concerns about yen weakness during a summit with Prime Minister Sanae Takaichi, reaffirming the shared stance on intervention.