The dollar index rose for the second week in a row, jumping 0.8% to 104.21 On Friday, the dollar is heading to record broad gains for the second week after raising interest rates in Japan failed to stop its upward march. The surprise cut in interest rates in Switzerland also highlighted the gap between the positions of the Federal Reserve and its peers around the world. The dollar index rose for the second week in a row, jumping 0.8 percent to 104.21, according to Reuters.
Expectations of policy easing in China increased pressure on its currency, which fell sharply to its lowest level in 4 months during internal trading, raising investor fears and prompting government banks to intervene. In the latest trading, the Chinese currency reached 7.2254 per dollar, and this trend extended across the exchange markets, which led to the dollar rising against its counterparts in Asian trading. The euro fell to its lowest level in three weeks at $1.0834, down 0.5 percent during the week.
The Australian and New Zealand dollars fell more than 0.5 percent each, and are heading towards recording weekly losses. “This will make some people think about the next step,” Westpac strategist Emery Spizer said. The US economy is in good shape and it does not appear that the Federal Reserve needs to rush to lower interest rates. The Bank of Japan recently announced a historic shift. By abandoning negative short-term interest rates, and placing a ceiling on long-term returns.
The yen fell, and is trading near multi-decade lows at 151.51 yen to the dollar. The dollar rose against the yen by 1.6 percent this week, and is approaching levels that prompted Japanese authorities to intervene in 2022, worrying investors while they are also looking for other currencies to buy and take advantage of interest rate differential deals. The pound sterling fell last night after the Bank of England left interest rates unchanged.
Over the course of the week, the British pound fell by 0.7 percent, touching a three-week low of $1.2635 in the Asian session.