Investing.com– Most Asian currencies moved little on Friday and were nursing losses for the week, while the dollar steadied at a one-year peak and was set for a strong week as markets dialed back bets on lower U.S. interest rates. 

The dollar was headed for a sixth straight week of gains as it extended its rally on Donald Trump’s election victory from last week. Less dovish statements from the Federal Reserve and strong U.S. inflation readings added to the greenback’s strength. 

This trend weighed heavily on most Asian units, with middling economic readings from China and Japan adding to the negative sentiment on Friday.

Dollar strong as rate cut bets recede on inflation, Powell comments 

The and both rose 0.1% on Friday and were close to a one-year peak hit earlier in the week.

The greenback was up between 1.6% and 2% this week, its best week since end-September.

Gains in the dollar were initially driven by Trump’s election victory, with expansionary policies under his administration expected to drive up inflation in the long term.

In the near-term, sticky and inflation readings spurred doubts over future rate cuts by the Federal Reserve, especially as Chair Jerome Powell said resilience in the U.S. economy gave the central bank more time to consider cutting rates.

His comments saw traders sharply dial back expectations for a 25 basis point cut in December. 

Japanese yen fragile, USDJPY crosses 156 after weak GDP 

The Japanese yen weakened further on Friday, with the pair trading above 156 yen and at its highest level in over three months. 

data for the third quarter showed Japanese economic growth slowed sharply from the prior quarter. While remained strong, weakness in other sectors of the economy, especially in exports and investment, weighed on growth.

The also grew less than expected in Q3, indicating that inflation growth slowed during the quarter. 

Friday’s data drove up hopes that weakness in the economy will keep the Bank of Japan from raising interest rates further- a scenario that bodes poorly for the yen. 

Broader Asian currencies were fragile and headed for weekly losses. The Chinese yuan’s pair rose 0.1% and was set for a seventh straight week of gains.

Chinese missed expectations, while grew more than expected in October on the Golden Week holiday. But overall economic conditions in the country still remained week, with recent stimulus measures largely underwhelming markets.

Focus is now on a potential cut by the People’s Bank next week. 

Concerns over China saw the Australian dollar weaken, with the pair hovering around a three-month low. 

The Singapore dollar’s pair fell 0.1%, while the South Korean won’s pair fell 0.2%. Both currencies were headed for losses this week.

The Indian rupee’s pair steadied after hitting record highs this week.

By Chibuike Oguh and Alun John

NEW YORK (Reuters) – The U.S. dollar strengthened against major peers on Thursday, trading at a one-year high and headed for a fifth straight session of gains, propelled by market expectations since Donald Trump clinched a dramatic return to the White House.

Markets anticipate that the incoming Trump administration will impose trade tariffs and tighten immigration as well as deepen the deficit, measures deemed to be inflationary.

The president-elect’s Republican Party will control both houses of Congress when he takes office in January, Edison Research projected on Wednesday, giving him wide powers to push his agenda.

The greenback climbed above 156 yen for the first time since July and was last up 0.56% to 156.38 per dollar. The euro slumped to its weakest since November 2023 and was down 0.45% at $1.05165 in choppy trading. Sterling hit its lowest on the dollar in four months and was last down 0.44% to $1.2651.

Following his election, the market has been looking at Trump’s appointment and seeing that he is not going to compromise on his campaign goals, whether it’s tariffs or China, said Steven Englander, head of G10 FX strategy at Standard Chartered (OTC:) in New York. “The market is assuming that he’s going to go ahead and implement all the things that he’s promised to do,” he said.

U.S. producer prices picked up in October, the Labor Department reported on Thursday, a day after data showed that consumer inflation had barely budged last month. The number of Americans filing new applications for unemployment benefits fell last week, suggesting labor market strength, according to the Labor Department.

The data did not change views that the Federal Reserve would deliver a third interest rate cut next month.

Fed chair Jerome Powell said on Thursday there was no need to rush rate cuts given the strong U.S. economy. His speech echoed earlier comments on Thursday by Federal Reserve governor Adriana Kugler and Richmond Fed President Thomas Barkin.

The , which measures the currency against six top counterparts including the euro and the yen, rose 0.17% to 106.64, after reaching as high as 107.07, its highest since early November 2023. The yield on benchmark U.S. 10-year notes fell 3.7 basis points to 4.414%.

pulled back from a record high of $93,480 overnight and was last up 0.96% to $89,489. Trump has vowed to make the United States “the crypto capital of the planet.” declined 0.27% to $3,144.

The Swiss franc remained under pressure against the dollar, which was up 0.3% to 0.889 franc. The Australian dollar fell to a three-month low after marginally weaker jobs data, weakening to as low as $0.6453.

“The price action that we’ve had is expected given the election outcome and the logic behind it is built on expectations rather than actualities: expectations of fiscal stimulus, tariffs and deregulation,” said Daragh Maher, head of FX strategy, Americas, at HSBC in New York.

“We’ve been in the dollar-bullish camp, so this seats neatly with our narrative, but clearly there’s been a big repricing.”

By Chibuike Oguh and Amanda Cooper

NEW YORK/LONDON (Reuters) -The U.S. dollar was set for its biggest weekly gain in over a month on Friday, as markets reassessed expectations of future interest rate cuts and with the view that President-elect Donald Trump’s policies could be inflationary.

The dollar has benefited from market expectation that Trump administration policies, including tariffs and tax cuts, could stoke inflation, leaving the Federal Reserve less room to cut interest rates.

Fed Chairman Jerome Powell said on Thursday the U.S. central bank did not need to rush to lower interest rates, prompting traders to axe their more aggressive bets on a rate cut next month and beyond.

The greenback was set to notch a weekly gain against the Japanese yen after it traded above 156 yen this week for the first time since July. It was last down 1.4% to 154.145 per dollar.

The euro was headed for the second straight week of losses after slumping to its lowest level since October 2023. It was last up at $1.054025.

“Today is more about the Fed than anything else, and I’m a bit surprised that the euro is a little stronger in the face of what were perceived to be more hawkish comments from Powell,” said Thierry Albert Wizman, global FX and rates strategist at Macquarie in New York.

“People are maybe thinking that there’s going to be a bit more chaos next year in view of some of the questionableness of these (U.S. cabinet) candidate appointments. So I can see why people are losing a little bit of faith in the Trump trade and the American exceptionalism story generally.”

Commerce Department data on Friday showed that U.S. retail sales increased slightly more than expected in October, but underlying momentum in consumer spending appeared to slow at the start of the fourth quarter.

Boston Fed president Susan Collins in comments published Friday in the Wall Street Journal also said rate cuts could be paused as soon as the Dec. 17-18 meeting, depending on upcoming data on jobs and inflation. The probability of a December cut has dropped to around 61% from closer to 82% a day ago, according to CME’s FedWatch tool.

Sterling was on track for its steepest weekly fall since January 2023, at roughly 2.4%. It was last down 0.38% at $1.2620. The pound showed little reaction to data showing Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter.

The is trading around a one-year high against a basket of currencies at 107.07, having risen nearly 1.65% this week, set for its best performance since September. It was last down 0.19% at 106.68.

In cryptocurrencies, bitcoin traded around $90,000, as some investors took profits after a stellar run. gained 2.64% to $90,545.00. declined 2.17% to $3,051.30.

“Today is really just an ahead-of-weekend consolidation; we haven’t taken out any key levels like 106 in the euro like 127 in sterling,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

“The market overreacted to Powell yesterday, but U.S. interest rates are still firm. So whatever forces were unleashed by the U.S. election, they haven’t been exhausted yet.”