Dollar Faces Weakest Weekly Performance in Four Months Amid Market Uncertainty

Global financial markets are currently in a state of uncertainty, as the U.S. dollar is poised to register its steepest weekly decline in four months. This drop is occurring amid low trading volumes attributed to the Thanksgiving holiday in the United States, according to Thursday's trading data.

Investor focus is shifting towards the future trajectory of monetary policy for the upcoming year, particularly as analysts predict that the U.S. Federal Reserve will be "the only major central bank to start cutting interest rates."

During Asian trading hours, the Japanese yen appreciated by approximately 0.4%, reaching 155.87 yen per dollar, bolstered by what analysts describe as "a shift in tone from Bank of Japan officials towards tightening monetary policy."

The euro also rose above the $1.16 mark, while the British pound climbed to $1.3265, marking its highest level since late October and heading for its largest weekly gains since August. Analysts attribute this performance to the "UK budget, which has alleviated some concerns regarding the financial situation."

The New Zealand dollar saw a significant increase, reaching its highest level in three weeks at $0.5728, gaining about 2% since the announcement from the Reserve Bank of New Zealand on Wednesday. Despite the central bank's decision to lower interest rates, it indicated that it is "considering the option to maintain them," suggesting that "the easing cycle may be coming to an end." Markets anticipate another rate hike by December 2026.

Similarly, the Australian dollar experienced an uptick following inflation data that "exceeded expectations," reinforcing experts' views that "the monetary easing cycle there is also likely over."

In this context, the dollar index, which measures the performance of the U.S. currency against a basket of major currencies, stabilized at 99.433 points after retreating from a six-month high reached last week. The index is currently on track to record its largest weekly decline since July.

As for the Chinese yuan, it remained steady at 7.08 against the dollar, supported by "the stabilization mechanism adopted by the Chinese central bank."