The dollar rose this Friday against the main currencies after falling in recent sessions, but closed a third consecutive week of declines due to the prospect of interest rate cuts next year.
Sterling also fell after data showed the UK economy unexpectedly contracted in the three months to October.
The euro remained stable at 1.1735 dollars, after having reached a maximum of more than two months the day before.
The dollar index, which compares the US dollar to a basket of six major currencies, rose 0.1% to 98.44 units, recovering from a two-month low on Thursday, but ending a third week of declines.
The dollar has fallen 1.1% so far in December. The index has lost more than 9% so far this year and is headed for its sharpest annual loss since 2017.
“It’s Friday fatigue. The dollar is down this week and pretty much all month,” said Bob Savage, head of macro market strategy at BNY in New York. “And is it because the Fed cut rates? Yes, partially.”
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Against the yen, the dollar rose 0.2% to 155.93 yen ahead of next week’s Bank of Japan meeting, which is expected to see a rate hike. Markets are attentive to comments from monetary policymakers on how the path of rates will shape up in 2026.
Reuters reported that the BoJ will likely maintain its commitment to continue raising interest rates next week, but emphasized that the pace of further increases will depend on how the economy reacts to each increase.
Sterling fell 0.2% to $1.3375, but close to Thursday’s seven-week peak, following economic data that is likely to boost expectations of Bank of England rate cuts.
The Federal Reserve lowered rates this week, as expected, but comments from the entity’s president, Jerome Powell, and the statement that accompanied the decision were seen by investors as less restrictive than expected and reinforced the dollar’s selling momentum.
With information from Reuters.
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