The dollar is heading for its worst weekly loss in 4 months

Today, the dollar is heading towards incurring its worst weekly loss since late July, as traders intensify their bets on further monetary easing next month, while liquidity declined due to the Thanksgiving holiday in the United States.

The dollar index, which measures the performance of the US currency against six major currencies, rose in the latest trading by 0.1 percent at 99.624, achieving some gains after declining for five days in its worst weekly loss since July 21.

According to CME’s Fed Watch tool, there are 87 percent chances of a US interest rate cut of 25 basis points at the Federal Reserve’s policy meeting on December 10, compared to 39 percent a week ago.

US 10-year Treasury bond yields rose in the latest trading by 0.8 basis points at 4.0037 percent, rebounding after a five-day decline that saw the four percent threshold briefly exceeded twice.

In Asia, the yen oscillated between gains and losses after a period of decline.

In one of the trading sessions, it recorded a decline of 0.1 percent to 156.385 yen against the dollar.

The Japanese currency rose briefly after reports that consumer prices in Tokyo rose 2.8 percent in November, slightly faster than economists expected and exceeding the Bank of Japan’s target of 2 percent.

“With labor market problems persisting and inflation excluding fresh food and energy remaining above 3 percent for now, the Bank of Japan will resume its tightening cycle over the next two months… The result is that the case for monetary policy tightening remains in place,” analysts from Capital Economics wrote in a research report.

The yen is heading lower for the third month in a row with the Japanese Prime Minister setting a stimulus package worth 21.3 trillion yen ($135.40 billion), while the Bank of Japan refrained from raising interest rates even with inflation rising above the target rate.

The euro settled at $1.1600, with little change so far in Asia.

The pound sterling fell 0.1 percent at $1.323 so far during the day, but is on track to record its best weekly performance since early August after British Finance Minister Rachel Reeves revealed plans to raise taxes by 26 billion pounds ($34 billion) on Wednesday.

The Australian dollar advanced 0.1 percent to $0.6536 in early trading after data showed private sector credit increased 0.7 percent in October compared to the previous month.

The yuan recorded 7.074 against the dollar in foreign transactions, stable in early Asian trading and on its way towards its best monthly performance since August.

As for the New Zealand dollar, it fell 0.1 percent to $0.5725 at the end of a week that witnessed its largest rise since late April.