US dollar heads for its best weekly performance in 5 months ‎

US dollar rose on Friday, heading towards recording its strongest weekly performance since July due to the decline in expectations of a sharp and early cut in interest rates this year, ahead of the release of closely watched US jobs data later on Friday.

According to Reuters, data on Thursday showed that employers in the American private sector hired a larger number of workers than expected in December, indicating continued strength in the labor market, which should continue to support the economy, as this helped the dollar overcome its weakness. The dollar index, which measures the performance of the US currency against a basket of currencies, recorded 102.39 in early trading on Friday. The index rose 1 percent this week, its strongest performance since the week ending July 23.

The dollar’s recovery will face a test when the non-farm payrolls report is released later in the session. Economists polled by Reuters expected 170,000 jobs to be created in December, down from 199,000 jobs in November.

Hamish Pepper, a strategist in fixed income and currency strategies at Harper Asset Management, said, “The strength of the dollar that we are witnessing at the beginning of 2024 may have a greater relationship with the demand for safe havens as stock markets face difficulties and market volatility increases.”

The CME Group’s Fed Watch tool showed a decline in traders’ bets on lowering interest rates, as markets now expect a 65 percent chance of a rate cut in March, compared to 86 percent the previous week.

With the rise of the dollar, the yen fell significantly this week, as the Japanese currency fell 2.5% against the dollar and is heading to record its weakest weekly performance since June.

On Friday, the yen fell 0.06 percent to 144.72 per dollar, after touching the lowest level in more than two weeks at 144.90 earlier in the session.

The euro rose in recent transactions by 0.09% to $1.0953, heading towards recording a weekly decline of 0.8%, ending a series of gains that lasted three weeks.

The British pound reached $1.2694 in recent transactions, rising 0.12% during the session, but it is still heading towards a slight decline for the week.

In terms of cryptocurrencies, Bitcoin fell 0.91% to $44,082.61, and Ether fell 0.53% to $2,263.75.

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