The Dollar Rises, Pressuring the Euro and the British Pound
The U.S. dollar is on track this week to record its best weekly performance since October, driven by a series of strong economic data and expectations of tightening monetary policy from the Federal Reserve, alongside escalating tensions between the United States and Iran.
The dollar received an additional boost after recent data showed a larger-than-expected decline in the number of Americans filing for unemployment benefits, reflecting stability in the country's labor market.
In global markets, the dollar maintained its gains in early Asian sessions on Friday, while the British pound fell to a one-month low of 1.3457 dollars, heading for a weekly decline of about 1.5%.
The euro also dropped 0.02% to 1.1768 dollars, with expectations of a weekly decline of 0.8%, affected by uncertainty regarding the future of European Central Bank President Christine Lagarde.
The dollar index against a basket of currencies recorded a level of 97.89 in the latest trading, approaching its highest levels of the month, achieving a weekly gain of over 1%, marking its strongest performance in more than four months.
Concerns about a potential conflict between the United States and Iran played a role in supporting the dollar as a safe haven; President Donald Trump warned Iran that it must reach an agreement on its nuclear program within 10 to 15 days, cautioning of "very bad things," while Tehran threatened to respond to any potential attack on U.S. bases in the region.
Markets are now awaiting the release of core personal consumption expenditures price index data and fourth-quarter GDP data later today.
Nevertheless, the FedWatch tool from CME indicates that investors still expect two interest rate cuts this year, with the likelihood of such a move in June dropping to 58% from 62% a week ago.
Regarding other currencies, the Aussie dollar fell 0.08% to 0.7055 dollars, expected to lose about 0.2% for the week, supported by expectations of tightening local monetary policy, while the New Zealand dollar decreased 0.12% to 0.5967 dollars.
In Asia, the Japanese yen declined 0.05% to 155.08 against the dollar, giving up slight gains made earlier after annual core inflation data for Japan showed 2.0% for January, the slowest pace in two years.
