The dollar is heading for its best weekly performance in a month

The dollar rose to its highest level in two and a half weeks against its major counterparts today, and is on track to record its best weekly performance in a month, amid bets that the Federal Reserve (the US central bank) will cut interest rates next week before holding off on further cuts.

The dollar also received support against the euro and the Swiss franc following the lowering of interest rates by their central banks the previous day, as well as against the yen amid speculation that the Bank of Japan will abandon raising interest rates at its meeting next week.

The dollar index, which measures the currency against the euro, yen and other currencies, rose to 107.05 for the first time since November 26. The index has increased by more than one percent since the beginning of the week until now.

Traders are almost unanimous that the US Federal Reserve will cut interest rates at the next meeting, but the CME’s Fed Watch tool shows expectations of only 21 percent for another cut in January.

The dollar rose 0.19 percent to 152.935 yen by 0132 GMT. It touched its highest level since November 27 at 152.965.
The US currency stabilized at 0.89235 francs after rising by 0.93 percent last night following the Swiss National Bank’s surprise cut in interest rates by half a percentage point. Over the course of the week, it rose 1.6 percent, its best performance since September.

The euro saw a slight change at $1.0464 after falling 0.27 percent last night, continuing the decline for the fifth day. It has decreased by about one percent since the beginning of the week until now.

Yesterday, the European Central Bank reduced interest rates by 25 basis points and kept the door open for further easing in the future as inflation approaches the target and the economy continues to be weak.

The British pound fell slightly to $1.2665.

The Chinese yuan also fell to 7.2811 to the dollar in foreign transactions, remaining under pressure after Reuters reported that Beijing is considering allowing its currency to fall further to counter the impact of any trade war with the United States.

The Australian dollar fell to $0.6365, and is heading towards its lowest level in more than a year, which it recorded on Wednesday, after abandoning all of the recovery witnessed yesterday, Thursday, against the backdrop of stronger than expected labor data.

In terms of cryptocurrencies, Bitcoin settled at $99,454 and is still hovering around the $99,500 level after rising to its highest level ever at $103,649 on December 5.