Dollar Breaks the Three-Day Losing Streak

The U.S. dollar index was 0.3% more increased at 95.157. However, it still looked set to finish the week down nearly 0.6%, its worst weekly showing since early September.

The dollar increased more than 6% against a basket of currencies in 2021. This week, it came under pressure despite Fed Chair Jerome Powell saying that the U.S. economy is ready to start tighter monetary policy. Moreover, data indicated the most significant annual climb in inflation in almost four decades.

Analysts stated that the hedge fund dollar positioning close to the highest levels after early 2020 has added to the selling pressure on the dollar this week.

U.S. retail sales fell by the most in 10 months in December. It likely resulted in Americans beginning their holiday shopping in October to bypass empty shelves at stores.

On Friday, the dollar labored to advance versus the Japanese yen. The U.S. currency dropped 0.02% to more than a three-week low of 114.15 yen.

Potential Interest Rate Hike

The safe-haven Japanese currency has profited from the recent souring of risk sentiment in international financial markets.

Bank of Japan policymakers debate how soon they can begin telegraphing an eventual interest rate hike. This could come even before inflation hits the bank’s 2% target, Reuters said on Friday.

With global stock markets under pressure on Friday and Treasury yields higher, the Australian dollar, caught as a liquid proxy for risk appetite, dropped 0.99% to a two-day low.

The sterling was 0.22% lower versus the dollar as investors assessed the impact of a potential leadership change in the country. After disclosures about a series of gatherings in Downing Street during coronavirus lockdowns, Prime Minister Boris Johnson met the gravest crisis of his premiership.

Cryptocurrencies struggled to make a meaningful rebound behind sharp losses at the start of the week. Bitcoin was up approximately 1% on the day at $43,086.34, not far from the five-month low of $39,558.70 connected on Monday.