Dollar Posts Strongest Weekly Gain Since November; Yen Strengthens Ahead of Elections
The dollar neared its highest levels in two weeks on Friday, set to achieve its strongest weekly performance since November, driven by a notable drop in technology stocks. This decline is attributed to investor apprehensions regarding substantial investments in artificial intelligence and its potential ramifications across various sectors.
Meanwhile, the Japanese yen strengthened ahead of the national elections scheduled for Sunday.
The dollar has gained ground since U.S. President Donald Trump nominated "Kevin Warsh" for the role of Federal Reserve Chair last week. Market expectations suggest that Warsh will not advocate for interest rate cuts, alleviating concerns about the Federal Reserve's independence.
The downturn in technology stocks followed investor worries over extensive expenditures on advanced artificial intelligence tools. Despite a decline in U.S. Treasury yields, the dollar remained buoyed as investors opted for safer assets, particularly in light of data indicating a weaker-than-expected labor market ahead of the January job report.
The dollar index, which gauges the U.S. currency's performance against six major currencies, rose to 97.961, approaching its highest level since January 23, and is poised for a weekly increase of 1%, marking its largest gain since mid-November.
In Japan, the yen climbed to 156.74 in anticipation of the national elections, where Prime Minister Sanae Takachi is favored to secure victory.
Regarding other currencies, the euro traded at 1.1784 dollars after the European Central Bank opted to maintain interest rates and downplayed the influence of dollar fluctuations on future policy decisions. Conversely, the British pound faced significant losses, stabilizing at 1.3520 dollars after a nearly 1% drop in the previous session, following the Bank of England's decision to keep interest rates unchanged after a narrow 5-4 vote.
In the cryptocurrency market, Bitcoin rose by 1.5% to $64,158 amid volatile trading, recovering from a low of $60,017, its lowest point since October 2024. However, it is still on track for a weekly decline of 16%, marking its largest drop since November 2022.
