The U.S. dollar weakened on Friday, dropping 0.3% to an index of 100.96, but remains on track for a second straight weekly gain as investors keep betting on higher Federal Reserve rates. The euro edged up 0.2% to $1.141, and the British pound rose 0.3% to $1.326, buoyed by hawkish remarks from Bank of England Governor Andrew Bailey.
Market backdrop
Recent robust economic data, lingering concerns about the U.S. fiscal position, and a series of hawkish Fed speakers have driven expectations of further rate hikes. A bond sell‑off pushed long‑dated Treasury yields to their highest levels in more than two decades, giving the greenback a temporary lift.
Analyst Khoon Goh of ANZ noted, “While higher yields should support the dollar, ongoing concerns about the fiscal outlook and policy unpredictability are weighing on its momentum.”
Yen strengthens on joint‑intervention signal
The Japanese yen rebounded 0.8% from three‑week lows, trading at 157.65 per dollar after Finance Minister Satsuki Katayama highlighted President Trump’s concern over yen weakness during his summit with Prime Minister Sanae Takaichi. Katayama said the United States and Japan remain committed to the joint intervention stance adopted in July, and that Treasury Secretary Scott Bessent would stay in close contact with Tokyo.
Senior MUFG currency strategist Derek Halpenny said the remarks “clearly underline ongoing efforts in Tokyo to present yen‑weakness mitigation as a continued joint strategy,” suggesting the possibility of further coordinated action.
Other currency moves
The offshore yuan was flat at 6.721 per dollar, while the Australian dollar rose 0.3% to $0.703 as the Reserve Bank of Australia is expected to raise rates by 25 basis points to a near‑15‑year high of 4.60% next week.
Overall, the dollar’s modest decline reflects a market balancing act between expectations of tighter U.S. monetary policy and concerns over fiscal sustainability, while the yen’s rally shows the impact of high‑level diplomatic reassurance on currency stability.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
