The U.S. Dollar Index held near a 19-month high on Friday and was on track for its strongest weekly gain in two months, as traders raised bets on further Federal Reserve tightening. The index was last up 0.15% at 103.37, its highest since April 2025 and heading for a third straight week of gains.
What happened
Hawkish comments from Federal Reserve officials and stronger-than-expected U.S. inflation data this week lifted Treasury yields and supported the greenback against most major peers. Two-year Treasury yields rose about 34 basis points over the week to around 4.87%, on course for their biggest weekly jump since April 2025.
The euro was down 0.26% at $1.103, after hitting its lowest level against the dollar since April 2025, and was on course for a fourth straight week of losses. The dollar was up 0.47% at 0.839 against the Swiss franc. In late New York trading, Xinhua put the Dollar Index at 103.412 at 3 p.m., with the euro at $1.1023 and sterling at $1.321.
The yen was a particular focus. It was steady at 159.70 per dollar in Reuters’s Friday report, around its weakest since early September and down about 1% on the week, on track for its biggest weekly loss since September. That left the rate hovering around the psychologically important 160 level and kept traders alert for possible intervention from Tokyo.
Drivers
Traders were pricing in a roughly 90% chance of a 25-basis-point rate increase in December, according to the CME FedWatch tool. Some officials have left open the possibility of a larger move if inflation does not ease, with the next Federal Open Market Committee meeting scheduled for 8–9 December. Marc Chandler, chief market strategist at Bannockburn Global Forex, told Reuters the dollar’s firmness was driven by a robust jobs report and an acceleration in consumer prices, together with a series of hawkish comments this week, including from New York Fed President John Williams and Fed Governor Christopher Waller.
The yen’s slide has also revived talk of official action. On Thursday, Japan’s top currency diplomat, Atsushi Mimura, warned that it was “too early to forget” this summer’s intervention as the yen again edged towards 160 per dollar. Japanese Finance Minister Satsuki Katayama said on Friday the government would respond appropriately to currency volatility. That verbal intervention came even as data showed Japan’s annual wholesale inflation re-accelerated to 7.1% in the year to October, from 6.8% in September, a reading that some analysts said could still support the case for a Bank of Japan rate increase as soon as next month.
Elsewhere in the Group of 10, the Australian dollar was down 0.52% at $0.6773 and was the worst-performing G10 currency against the dollar so far this month. The New Zealand dollar weakened 0.41% to $0.5525 and was on course for a third straight week of losses.
What it means for buyers and producers
A stronger dollar raises the local-currency cost of dollar-priced commodities for buyers in Europe, Asia and elsewhere, even when dollar prices themselves are falling. That effect has already been visible this week in copper and other metals, where the firmer greenback and higher U.S. yields added to selling pressure. Importers invoiced in dollars may need more working capital, while a yen close to 160 raises the risk of sudden official intervention, which can move commodity-linked exchange rates quickly.
What to watch
The next U.S. inflation releases and further comments from Federal Reserve officials will set the tone into the 8–9 December meeting. A break of 160 in dollar-yen would sharpen the intervention watch, especially after this week’s warnings from Mimura and Katayama. Euro-dollar is already at its weakest since April 2025; any further slide would keep adding to euro-area import costs. Commodity desks should treat dollar strength as a cross-market driver, not a side issue, while the rate-hike debate is live.
Key figures
- U.S. Dollar Index: 103.37, up 0.15%, highest since April 2025; Xinhua late New York reading 103.412.
- Two-year Treasury yield: around 4.87%, up about 34 basis points on the week.
- Euro: $1.103, down 0.26%, weakest since April 2025; late New York $1.1023.
- Yen: 159.70 per dollar, around the weakest since early September, down about 1% on the week.
- CME FedWatch: roughly 90% chance of a 25-basis-point increase in December.
- Australian dollar: $0.6773, down 0.52%; New Zealand dollar: $0.5525, down 0.41%.
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