The dollar is trying to end the week on a high, and the yen is being hurt by the Bank of Japan
The dollar continued to rise amid hawkish expectations from the Federal Reserve as it hit its highest levels in two years, despite the US interest rate cut by 25 basis points last Wednesday.
The dollar is expected to end the week with a gain of 1.5% so far, supported by expectations that US interest rates will remain higher for longer, as markets are now pricing in less than 40 basis points of cuts for 2025.
It is worth noting that the markets will focus their attention today on the release of core PCE price data, the Fed's preferred indicator for measuring inflation, which will have the potential to affect the US dollar and stock sentiment.
USDCAD
The Canadian dollar continued to decline against the US dollar and reached its lowest levels in more than four years and the Australian and New Zealand dollars reached their lowest levels in two years with a weekly decline of almost 2%, as commodity currencies were the most declining against the dollar during the past period.
USDJPY
The pair's movements during the Asian trading period on Friday were calmer, however, the yen reached its lowest levels in 5 months against the US dollar, as it remains under pressure from the reluctance of the Bank of Japan to raise interest rates.
The Bank of Japan kept interest rates unchanged on Thursday, and Kazuo Ueda, the governor of the Bank of Japan, did not give any date to start raising interest rates, as markets were expecting him to hint at this next January, however, based on his comments, we believe that the Bank of Japan is likely to raise interest rates a little slower next year.
The basic scenario that the markets are pricing now is March as the first increase in interest rates.
On the other hand, data released on Friday showed the acceleration of core inflation in Japan with rising food and fuel costs that affected households.
GBPUSD
The British pound against the US dollar fell to seven-month lows heading for a weekly decline of more than 1%, after the interest rate decision from Britain yesterday, as policymakers at the Bank of England (BoE) voted by a majority of 6-3 to keep interest rates unchanged on Thursday, a bigger split than expected.
The result was interpreted as more pessimistic than expected by the markets, as traders now estimate about 53 basis points of interest rate cuts for 2025, up from about 46 basis points before yesterday's meeting.
EURUSD
The EUR / USD pair fell to its lowest level in one month with a weekly decline of more than 1% against the backdrop of the strength of the US dollar.
