Dollar rises on expectations of U.S. rate cut

The dollar rose to a two-and-a-half-week high against its major peers on Friday and was on track for its best week in a month, amid bets the Federal Reserve will cut interest rates next week before holding off on further cuts.

The dollar also found support against the euro and the Swiss franc after their central banks cut rates the previous day, and against the yen amid speculation the Bank of Japan will abandon a rate hike at its meeting next week.

The dollar index, which measures the currency against the euro, yen and other currencies, rose to 107.05 for the first time since Nov. 26. It has gained more than 1% so far this week.

Traders are almost unanimously expecting the U.S. central bank to cut rates at its next meeting, but the CME FedWatch tool shows only a 21% chance of another cut in January.