The dollar traded on the cusp of its worst week in more than two months as expectations of Federal Reserve interest-rate cuts coupled with emerging credit risks in the US banking sector weighed on the greenback.
The Bloomberg Dollar Spot Index edged higher on Friday but is still on pace to lose some 0.4% since Monday’s open, the largest weekly decline since August. Policy-sensitive two-year Treasury yields traded near a three-year low, while traders boosted bets on Fed easing and are now pricing some 51 basis points of rate reductions by December versus 46 basis points on Wednesday.