SINGAPORE, Nov 28 — The US dollar was heading for its worst weekly performance since late July on Friday as traders ramped up bets for further monetary easing from the Federal Reserve next month, while liquidity was thinned by the US Thanksgiving holiday.
The dollar index, which measures the greenback’s strength against a basket of six major peers, was last trading up 0.1 per cent at 99.624, recovering some ground after five days of decline pushed it to its worst one-week loss since July 21.
US Fed funds futures are pricing an implied 87 per cent probability of a 25-basis-point cut at the Federal Reserve’s next policy meeting on December 10, compared to a 39 per cent chance a week earlier, the CME Group’s FedWatch tool showed.
The yield on 10-year Treasury bonds was last up 0.8 basis point at 4.0037 per cent, rebounding after five days of decline that saw the 4 per cent threshold briefly crossed twice.
In Asia, the Japanese yen fluctuated between gain and loss after a period of decline.
It was last trading 0.1 per cent weaker at ¥156.385 as labour market and inflation data firmed up the case for monetary tightening in Asia’s second-biggest economy, against a backdrop of persistent weakness in the currency that has led to the prospect of intervention from the Ministry of Finance.
The currency had briefly edged higher on news that consumer prices in Tokyo rose 2.8 per cent in November, slightly faster than economists had expected and exceeding the Bank of Japan’s 2 per cent target.
“With the labour market still tight and inflation excluding fresh food and energy set to remain above 3 per cent for now, the Bank of Japan will resume its tightening cycle over the next couple of months,” analysts from Capital Economics wrote in a research report. “The upshot is that the case for tighter monetary policy remains intact.”
The yen is on track for a third month of decline as Prime Minister Sanae Takaichi sets out a ¥21.3 trillion (RM559 billion) stimulus package, while the Bank of Japan has held off hiking interest rates even as inflation runs above target.
The euro stood at US$1.1600, little changed so far in Asia, as Ukraine’s President Volodymyr Zelenskiy on Thursday said Ukrainian and US delegations are to meet this week to work out a formula discussed at talks in Geneva to end war with Russia and provide security guarantees for Kyiv.
Sterling was 0.1 per cent weaker at US$1.323 so far on the day, heading for its best weekly performance since early August, after Britain’s finance minister, Rachel Reeves, revealed plans to raise taxes by 26 billion pounds on Wednesday.
Reeves fought back on Thursday against criticism of spending plans, which will fund extra welfare spending by raising the country’s tax burden to a post-World War Two high.
The Australian dollar fetched US$0.6536, up 0.1 per cent in early trade, after data showed private sector credit increased 0.7 per cent in October compared with the previous month, accelerating slightly from the prior month’s print.
The offshore yuan traded at 7.074 yuan per US dollar, steady in early Asian trade and on track for its best monthly performance since August.
The kiwi traded at US$0.5725, edging 0.1 per cent weaker at the end of its biggest one-week surge since late April.